Specialty coffee house sells colombian coffee

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Reference no: EM131719676

A specialty coffee house sells Colombian coffee at a steady rate of 3600 pounds annually. The beans are purchased from a local supplier for $5.33 per pound. The coffee house estimates that it costs them $120 in paperwork and labor to place an order for the coffee. Holding costs are based on a 20% annual rate.

Suppose the coffee from the above problem has a shelf life of 1 month.

a. How often should orders be placed?

b. What quantity should be ordered?

c. How much would this coffee house be willing to pay for a vacuum freezer that would store the coffee for up to 3 months?

d. How about 6 months?

Reference no: EM131719676

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