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Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $25 per delivery (no matter how much is delivered) and $1.15 per
Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $25 per delivery (no matter how much is delivered) and $1.15 per gallon. Joes annual holding cost per unit is 35 percent of the price per gallon. Joe uses 200 gallons of malt per week.
Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $25 per delivery (no matter how much is delivered) and $1.15 per gallon. Joe's annual holding cost per unit is 35 percent of the price per gallon. Joe uses 200 gallons of malt per week. a. Suppose Joe orders 125 gallons each time. What is his average inventory (in gallon)? b. Suppose Joe orders 1,250 gallons each time. How many orders does he place with his supplier each year? Note: Round your answer to 2 decimal places. c. How many gallons should Joe order from his supplier with each order to minimize the sum of the ordering and holding costs? d. Suppose Joe orders 3,000 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 3 decimal placesStep by Step Solution
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