Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $35 per delivery (no matter how much is delivered) and $1.30 per
Joe Birra needs to purchase malt for his microbrewery production. His supplier charges $35 per delivery (no matter how much is delivered) and $1.30 per gallon. Joes annual holding cost per unit is 30 percent of the price per gallon. Joe uses 225 gallons of malt per week.
A: Suppose Joe orders 1,000 gallons each time. What is his average inventory (in gallon)?
B: Suppose Joe orders 2,000 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 2,250 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 places.
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 2 decimal places.
F: If Joes supplier only accepts orders that are an integer multiple of 1000 gallons, how much should Joe order to minimize ordering and holding costs per gallon?
G: Joes supplier offers a 3.00 percent discount if Joe is willing to purchase 8000 gallons or more. What would Joes total annual cost (purchasing, ordering, and holding) be if he were to take advantage of the discount?
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