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The Petroco Company uses a highly toxic chemical in one of its manufacturing processes. It must...

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Accounting

The Petroco Company uses a highly toxic chemical in one of itsmanufacturing processes. It must have the product delivered byspecial cargo trucks designed for safe shipment of chemicals. Assuch, ordering (and delivery) costs are relatively high, at $2,600per order. The chemical product is packaged in 1-gallon plasticcontainers. The cost of holding the chemical in storage is $50 pergallon per year. The annual demand for the chemical, which isconstant over time, is 2,000 gallons per year. The lead time fromtime of order placement until receipt is 10 days. The companyoperates 310 working days per year. Compute the optimal orderquantity, the total minimum inventory cost, and the reorderpoint.

SUMMARY
Q= ORDER QUANTITY =
AVERAGE INVENTORY =  
NUMBER OF ORDERS =  
CARRYING COST =  
ORDERING COST =  
TOTAL COST =
DEMAND PER DAY =
REORDER POINT =

Answer & Explanation Solved by verified expert
3.7 Ratings (591 Votes)
The optimal order quantity is found using the followingequationOptimal order quantity 45607 gallonsAverage    See Answer
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