Calculate the EOQ and the number of annual deliveries

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Reference no: EM132256994

Demand for gasoline at a local gas station is constant at about 800 gallons per day. The gas station is open every day of the year. Assume that the wholesale price per gallon is $1.70 and that the annual holding cost of a gallon of gas is about $0.85. Every time a tanker makes a delivery, there is a $250 delivery charge charged to the station. How much gasoline does the gas station sell annually? Calculate the EOQ and the number of annual deliveries. Determine the TC, the total cost per year? Assume that the tanker holds up to 30,000 gallons. If the gas station orders a full taker of gasoline, they do not have to pay the delivery charge. Is it more cost-effective to continue following the EOQ policy or to begin ordering full tankers for every delivery? What is the difference in total cost?

Reference no: EM132256994

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