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Continuing with the Information About Enviroguard in Another Problem,the Company

Question 103

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Continuing with the information about Enviroguard in another problem,the company could make this chemical in-house at the rate of 1/8 = 0.125 gallon per day,at a cost of $300 per gallon.The setup cost is $150.Using a 7-day week,the daily demand,d,is 1/21 = 0.0477.Compare using the EOQ and the ELS systems.What course of action do you recommend?

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EOQ:
D = 1/3 gal/wk × 52 wks/yr = 17.33 ...

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