Minimize total controllable costs


Yooper, Inc. is a major manufacturer of large truck axles. Iron ore is one of the major raw materials used in this production operation. Yooper currently pays $700 per ton for iron ore. The delivery lead time from the supplier to Yooper is one month. Yooper estimates that it uses iron ore at a very steady at a rate of 1500 tons per month. Yooper calculates its holding costs using an annual rate of 28% and the company estimates that each delivery of iron ore results in a fixed cost of $1050, regardless of how many tons are ordered. How many tons of iron ore should Yooper order to minimize total controllable costs?

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Operation Management: Minimize total controllable costs
Reference No:- TGS057811

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