Root cream company plans to buy 20000 gallons of milk


Root Cream Company plans to buy 20,000 gallons of milk annually. It will buy the milk at $2.45 a gallon, plus $30 charge per delivery. The cost of capital for Root is 10%, The storage cost of the milk at the average inventory level, is 2 cents per gallon per day. However, due to state regulations it cannot store the gallon milk for more than 5 days. Calculate the optimal size of the milk storage tank that it should acquire.

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Operation Management: Root cream company plans to buy 20000 gallons of milk
Reference No:- TGS02473309

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