Dulles Electric Company buys 1 million tons of coal annually to burn at its power plant. The company wants to invest in a unit train that will haul coal from the mine to the power house, where it is dumped in a large field. The shipping cost is expected to be $40 a ton. The cost of capital to Dulles is 10% per annum. The price of coal is $180 a ton. The cost of processing an order is $12,500. Find the optimal capacity of the unit train. How often does it make the trip to the mine?
Find the optimal capacity of the unit train = 33,710 tons, How often does it make the trip to the mine = approximately every 12 days