Discussion 9: Chapter 12: Fuel Inventory Management at Wawa 99 unread replies.99 replies. Is it obvious to you that Wawa as a corporation holds a lot of inventory? Think about all of the...

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Discussion 9: Chapter 12: Fuel Inventory Management at Wawa

99 unread replies.99 replies.

Is it obvious to you that Wawa as a corporation holds a lot of inventory? Think about all of the "stuff" in each store ... finished goods like soda or tea bottles, unfinished goods like lettuce and tomatoes and such to make sandwiches. And how about gasoline? Wow! They pump a lot of fuel, don't you think? (close to 1.9 billion gallons per year!) So, if there are almost 1,000 Wawa locations around the USA (all on the East Coast), the net average for gallons of gas/diesel pumped per store is 2 million gallons per year per store. Wow!

For your post, refer to Section 12.5 of the textbook (basic EOQ models). Assume you are the Manager of a typical Wawa store, and you are now making plans for the calendar year 2022. Your annual demand (D) for fuel in 2022 is projected to be 2,000,000 gallons (total across all types of fuel), and your 2021 actual number of gallons sold is expected to be almost 2,050,000 gallons. You place an order for fuel with your supplier based on your EOQ. Your location has a total fuel tank capacity of 32,000 gallons (across all types of fuel), your (Q) is equal to 25,000 gallons, your diesel fuel lines have a tendency to clog, and your Fuel Manager wants a big raise this year.

1. How many times in the calendar year 2022 do you expect your store to place an order for fuel? Explain how you calculated it and show your work.

2.You don't need to post any replies to other posts this week (unless you want to!)

Answered Same DayApr 17, 2022

Solution

Bhavani answered on Apr 18 2022
10 Votes
EOQ models:
To place an order for fuel in the calendar year 2022 = D /Q
D = 2,000,000 gallons
Q=25,000 gallons
Number of orders to be placed = 2,000,000 / 25,000
= 80
Explanation:
Annual demand of the period and Economic order quantity are the two items needed to calculate to place an order for fuel. Annual demand was shown as “D” and Economic order quantity was shown as “ Q” and its related numbers were given in the information.
Annual demand is an estimation calculated by the last year annual sold of gallons. Economic order quantity is the nominal purchase ...
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