Each month, a gas station sells 4000 gallons of gasoline. Each time the parent company refills the station’s tanks, it charges the station $100 plus $2.40 per gallon. The annual cost of holding a...

Each month, a gas station sells 4000 gallons of gasoline. Each time the parent company refills the station’s tanks, it charges the station $100 plus $2.40 per gallon. The annual cost of holding a gallon of gasoline is $0.30.


a. How large should the station’s orders be?


b. How many orders per year will the station place? c. How long will it be between orders?


d. Are the EOQ assumptions satisfied in this situation? Why or why not?


e. If the lead time is 2 weeks, what is the reorder point? If the lead time is 10 weeks, what is the reorder point?