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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 $1.25 per gallon. Joe's annual holding cost per unit is 25 percent ofthe 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)? 500 gallons 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. 9.36 c. How many gallons should Joe order from his supplier with each order to minimize the sum otthe ordering and holding costs? l d. Suppose Joe orders 2,000 gallons each time he places an order with the supplier. What is the sum ofthe ordering and holding costs per gallon? Note: Round your answer to 3 decimal pieces. 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. W1at is the annual cost of the E00 expressed as a percentage of the annual purchase cost? Note: Round your answer to 2 decimal places. % f. lfJoe's supplier only accepts orders that are an integer multiple of 1000 gallons, how much should Joe orderto minimize ordering and holding costs per gallonStep by Step Solution
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