A fish oil trading company has an inventory on plant of 0 MT of fish oil by the first day of December 2021. Sales are around 1900 MT a month on average with very little variation (see sales chart):

SALES CHART:

December             January              February              March

1700 MT             1900 MT                1900 MT           1900 MT

On the other hand, the company has fish oil arriving that is already bought according to the following chart;

PURCHASE CHART:

December          January          February          March

3998 MT           2780 MT          1608 MT          300 MT

The inventory Price (average) of the purchases is USD 1615/MT. Prices vary so market prices with availability to buy more fish oil in January, February and march are between USD 1740/MT – USD 1840/MT.

Using ANY inventory model, we need to determinate;

1. What is the minimum volume of fish oil that the company can possibly buy in order to reach an inventory Price by the end of march of USD 1700/MT maximum and also satisfy the sales requirement?

2. What is the maximum buying Price and volume of fish oil that the company can afford without breaking the USD 1700/MT average inventory Price barrier.

Answer rating: 100% (QA)

1 In order to reach an inventory price of USD 1700MT by the end of March the company would nee... View the full answer