Question

Question 13 of 35 Question 13 3 tra Credits Farmer joe buys fuel for his farm from the local co-op. He uses 1.000 gallons ment The coop charges him $100.09 berarder when he orders and it costs him $1.50 per gallon per year to store the is farm. The co-op can arrive within an hour of his order and Joe only has a 500 gallon tank he con il How much fuel should joe order every time he places an order?

Answer 1

Answer: 500 gallons

Explanation:

Annual Demand (D) = 1000*12 = 12000 gallons

Cost per Order (S) = $100

Annual Holding Cost per gallon (H) = $1.50

EOQ (Q) = SQRT(2*S*D/H) = SQRT(2*100*12000/1.50) = 1264.91 gallons > the storage capacity of 500 gallons

So Feasible Order Qty = 500 gallons.