Question

BP Industrial Products produces Type A dilutant. The Demand is 30 barrels per working day, and the production rate is 50 barrels per working day. The plant operates 250 days per year. The EPQ has been calculated to be 170 barrels.

What is the maximum inventory?
a. 75 Barrels
b. 40 Barrels
c. 68 Barrels
d. 50 Barrels

Answer 1

The maximum inventory can be calculated by subtracting the demand from the production rate and then multiplying the result by the number of working days per year.

Step-by-step explanation:

The maximum inventory can be calculated by subtracting the demand from the production rate and then multiplying the result by the number of working days per year. In this case:

Maximum inventory = (Production rate - Demand) x Number of working days per year

Maximum inventory = (50 barrels per day - 30 barrels per day) x 250 days per year

Maximum inventory = 20 barrels per day x 250 days per year

Maximum inventory = 5000 barrels per year

Therefore, the maximum inventory is 5000 barrels.