Each month, a gas station sells 4,000 gallons of gasoline.
Each time the parent company refills the stationĂ˘â‚¬â„˘s tanks, it charges the station $50 plus 70Ă‚Â˘, per gallon. The annual cost of holding a gallon of gasoline is 30Ă‚Â˘.
a How large should the stationĂ˘â‚¬â„˘s orders be?
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b How many orders per year will be placed?
c How long will it be between orders?
d Would the EOQ assumptions be satisfied in this situation? Why or why not?
e If the lead time is two weeks, what is the reorder point? If the lead time is ten weeks, what is the reorder point? Assume 1 week Ă‚Â year.