Reference no: EM133697036

Assignment:

1) Natalia owns and operates a small donut shop in Philadelphia, Canada. She is constantly baking donuts which are sold fresh out of the oven and customers line up to purchase them. She manages the inventory of the pastry flour used to make the donuts very carefully. The quantity of pastry flour she uses is exactly equal to 25 kilos per day (which makes exactly 250 donuts). The selling price of a donut is $3.50. The pastry flour is purchased from a supplier at a cost of $2.20 per kilo, plus a fixed delivery fee of $50 per order (no matter what the order size is). Orders for flour are always received exactly 2 days after they are placed. On a day when a flour delivery is scheduled to arrive, Natalia hires her friend Gilbert to help with the receiving and storing of the pastry flour.

She always pays him $60 for the job, no matter what the quantity delivered is and how long it takes him to do the work. The pastry flour is stored in a dry storage room which is kept at a constant temperature at all times of the day and night. The electricity cost associated with the storage room is estimated at $7 per week (this amount does not vary with the quantity of flour stored in the storage room). Natalia currently gets a 2.5% interest rate on her savings account annually. She plans to invest any cash the donut business generates into an exciting business opportunity (mass-market gluten-free donuts), promising an amazing return on investment of 5% per week. Assume 50 weeks per year and 7 days per week.

2) In the problem described in question 1, suppose Natalia orders 200 kilos every time she places an order and she makes sure the orders are placed at the right time so the delivery arrives just as she runs out of flour. How many days are there between two successive orders?

3) For the problem described in question 1, Natalia orders 125 kilos every time she places an order and makes sure the orders are placed at the right time so the delivery arrives just as she runs out of flour.

What is the total cost (setup + inventory holding + purchasing) per order cycle (in $)? [Please round up your answer to the nearest integer value]

4) For the problem described in question 1, Natalia orders 125 kilos every time she places an order and makes sure the orders are placed at the right time so the delivery arrives just as she runs out of flour.

What is the total cost (setup + inventory holding + purchasing) per week (in $)? [Please round up your answer to the next integer value.]