Question

Torrance Refinery produces approximately 20.3 Million barrels of gasoline per year. A California distributor sources its gasoline from the Torrance refinery. The annual demand for gasoline at the California distributor is 10.5 Million barrels. The cost of storing gasoline is approximately $22 per barrel (per year). The cost of placing an order to the Torrance refinery (including shipping) is $7700 per order. Orders will be received gradually instead of delivered all at once (hence EPQ).

a) At what quantity will the total cost of procurement be the lowest?

Round your answer to the nearest whole number. Do NOT include a comma. For example, answer like 103542 and NOT 103,542

b) How many days does each production run last at the Torrance Refinery to serve the California distributor?

Round your answer to 2 decimal places. For example, answer like 3.21?

Answer 1