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Joe wants to purchase malt for his microbrew production. His supplier charges $40 per delivery (no matter how much is delivered) and $2.50 per gallon.
Joe wants to purchase malt for his microbrew production. His supplier charges $40 per delivery (no matter how much is delivered) and $2.50 per gallon. Joe's annual holding cost per unit is 40% of the dollar value of the unit. Joe uses 4000 gallons of malt per week. Assume Joe runs business 50 weeks per year. How many gallons should Joe order from his supplier with each order to minimize total inventory-related costs (holding and ordering)? A. For the next 3 parts, assume Joe selected the order quantity specified in part (A) B. What is the micro-brewer's inventory turns per year? C. How many orders per year would he place on average? D. If Joe places an order for 8000 gallons, then will he receive a 4% discount off the regular price of $2.50. If Joe were to do this with each order, what would be his average annual total cost in dollars? Don't forget to include the cost to purchase the units, the delivery charges and inventory holding costs
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