Module 6 q1

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The Metropolitan Bus Company (MBC) purchases diesel fuel from American Petroleum Supply. In addition to the fuel cost, American Petroleum Supply charges MBC $200 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 American Petroleum 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 120,000 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? ---Select- per --Select- (c) The MBC storage tanks have a capacity of 12,500 gallons. Should MBC consider expanding the capacity of its storage tanks? The maximum inventory is MBC ---Select--- to expand its storage tanks. (d) What is the reorder point in gallons)? gallons