How frequently should mbc order to replenish the gasoline


The metropolitan Bus Company (MBC) purchases diesel fuel from Canadian Petroleum Supply (CPS). In addition to the fuel cost, CPS charges MBC $250 per order to cover the expenses of delivering and transferring the fuel to MBC’s storage tanks. The lead time for a new shipment from CPS is 10 days; the cost of holding a gallon of fuel in the storage tanks is $0.04 per month, or $0.48 per year; and annual fuel usage is 15,000 gallons. MBC buses operate 300 days a year. a. What is the optimal order quantity for MBC? b. How frequently should MBC order to replenish the gasoline supply? c. The MBC storage tanks have a capacity of 15,000 gallons. Should MBC consider expanding the capacity of storage tanks? d. What is the reorder point?

Request for Solution File

Ask an Expert for Answer!!
Operation Management: How frequently should mbc order to replenish the gasoline
Reference No:- TGS02569636

Expected delivery within 24 Hours