What will be the average inventory of fuel in his 35000


Jack owns a local trucking company. With the high fuel costs, Jack wants to evaluate how much fuel, on average, he should store in his 35,000 fuel tank. Each year Jack uses 30,000 gallons of diesel (usage is spread evenly throughout the year). Jack knows with certainly that he can have a load of fuel delivered in 10 days. Jack says, "The darn delivery service charges a $150 fee for each delivery, no matter how much I purchase." Earlier this year Jack hedged his fuel at $2.00 per gallon. Jack does some horse trading on the side, so he thinks his holding cost per unit is $0.10. If Jack orders at EOQ, what will be the average inventory of fuel in his 35,000 gallon tank?

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