Answer Happy

Question 2: The Vt Ltd. uses a highly toxic chemical in one of its manufacturing processes. It must have the product delivered by special cargo trucks designed for safe shipment of chemicals. As such, ordering costs are relatively high, at $3600 per order. The chemical product is packaged in one-gallon plastic containers. The cost of holding the chemical in storage is $50 per gallon per year. The annual demand for the chemical, which is constant over time, is 7000 gallons per year. The lead time from time of order placement until receipt is 10 days. The company operates 310 working days per year. Compute the optimal order quantity, total minimum inventory cost, and reorder point. [5 Marks]