How many trips should the quality manager do each year

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Reference no: EM133532366

Question: Financial and operational info for ZYX chocolate maker is provided below:

Annual sales: 120,000 kg of chocolate
Sales price: $20 per kg of chocolate
Cocoa beans suppliers: 4 in countries A, B, C, and D
Cocoa beans consumption: 100,000 kg per year
Cocoa beans purchase price: $10 per kg of cocoa beans (delivered) independent of origin country
Holding inventory cost: 14.4% annually
Order handling cost (customer clearance, etc.): $300 per order, independent of order quantity
Sourcing cost: Quality control manager travels to the bean supplier site to test the beans before shipment. Average trip cost: $4200 per trip, independent of origin country
Answer the following questions. must show your calculations.

How many trips should the quality manager do each year, if the goal is to minimize the total cost (inventory holding cost and the ordering cost)? [assume that they can produce chocolate from any type of cocoa beans, and no blending is required]

What is the average inventory of cocoa beans?

If ZYX follow the above plan, they receive each order of cocoa beans when the last order is consumed. In other words, at any moment in time there is only one type of beans available to use. In order to improve the quality, ZYX has decided to hold all four beans at the same time, and blend them in equal amounts. If they plan to keep the average inventory (summed over all 4 beans) at the same level you found in part 2, calculate the maximum travel cost they can afford per trip.

Reference no: EM133532366

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