Decided to start a small production facility

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Bruno Fruscalzo decided to start a small production facility in Sydney to sell gelato to the local restaurants. His local milk supplier charges $0.4 per kg of milk plus a $20 delivery fee per order (that is independent of the amount ordered). Bruno’s holding cost is $0.05 per kg per month. He needs 8200 kgs of milk per month. (Use 2 decimals )

a. How many kgs should Bruno order from his supplier with each order to minimize the sum of ordering and holding costs?

b. Suppose Bruno orders 10,800 kgs each time. What is his average inventory (kgs)?

c. Suppose Bruno orders 7,000 kgs each time. How many orders does he place with his supplier each year?

Reference no: EM131156076

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