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Palletizes empty merchandise cartons for recycling

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Reference no: EM131039291

Walmark Store compresses and palletizes empty merchandise cartons for recycling. The store generates 5 pallets per day. The cost of storing a pallet in the store's back lot is $.10 per day. The company that moves the pallets to the recycling center charges a flat fee of $100 dollars for the rental of its loading equipment plus a variable transportation cost of $3 per pallet. Graph the change in number of pallets over time, and devise an optimal policy for hauling the pallets to the recycling center.

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The question is about economic order quantity which is the order quantity at which the total cost will be minimum. if the company transfer pallets more than or less than EOQ for recycling then the total cost will increase. So Walmart stores should stores 11 pallets and then send it for recycling so that total cost of recycling of pallets will be minimum.This model is given by great mathematician Mr. Williams.

Reference no: EM131039291

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