Question: Question 1.1 (15 marks). A school bus depot operates 250 days per year. Daily demand for diesel fuel at the depot is normally distributed with

Question 1.1 (15 marks). A school bus depot

Question 1.1 (15 marks). A school bus depot operates 250 days per year. Daily demand for diesel fuel at the depot is normally distributed with an average of 300 liters and a standard deviation of 14 liters. Holding cost for the fuel is $0.30 per liter per year, and ordering cost is $75 an order. Also, it takes two days to receive a delivery of diesel fuel. a) Calculate the EOQ? (4 marks) b) Based on the EOQ, how many orders per year will be made, and what is the average level of inventory being carried? (5 marks) c) Determine the reorder point needed if the manger wants a lead time service level of 99%. Z value for 99% is 2.33) (6 marks) Ouestion 1 2015 marks)

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