Assignment:
Jack owns a local trucking company. With fuel costs being expensive, Jack wants to evaluate how much fuel, on average, he should store in his 6,800 gallon fuel tank. Each year Jack uses 68,000 gallons of diesel (usage is spread evenly throughout the year). Jack knows with certainly that he can have a load of fuel delivered in 5 days. The price of fuel is $2.04 per gallon and there is a separate $50 ordering fee per order. Jack thinks his holding cost per unit is 40%. If Jack orders at EOQ, what will be the average inventory of fuel in his 6,800 gallon tank?
A. ~1,202 gallons
B. ~1,278 gallons
C. ~2,164 gallons
D. ~1,443 gallons