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Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $ 3 0 per delivery ( no matter how much is delivered
Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $ per delivery no matter how much is
delivered and $ per gallon. Joe's annual holding cost per unit is percent of the price per gallon. Joe uses gallons of malt
per week.
a Suppose Joe orders gallons each time. What is his average inventory in gallon
Average inventory
gallons
b Suppose Joe orders gallons each time. How many orders does he place with his supplier each year?
Note: Round your answer to decimal places.
Number of orders
c How many gallons should Joe order from his supplier with each order to minimize the sum of the ordering and holding costs?
Number of gallons
d Suppose Joe orders gallons each time he places an order with the supplier. What is the sum of the ordering and holding
costs per gallon?
Note: Round your answer to decimal places.
Costs
per gallon
e Suppose Joe orders the quantity from part c that minimizes the sum of the ordering and holding costs each time he places an
order with the supplier. What is the annual cost of the EOQ expressed as a percentage of the annual purchase cost?
Note: Round your answer to decimal places.
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