What is the economic order quantity? for kona coffee? beans

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Reference no: EM131806141

A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 76 pounds of Kona coffee beans a day.? (Demand can be assumed to be distributed normally with a standard deviation of 14 pounds per? day). After ordering? (fixed cost? = ?$19 per? order), beans are always delivered from Hawaii in exactly 4 days.? Per-pound annual holding costs for the beans are ?$3. Refer to the standard normal table for? z-values.

?a) What is the economic order quantity? (EOQ) for Kona coffee? beans? _____ pounds ?(round your response to the nearest whole? number).

?b) What are the total annual holding costs of stock for Kona coffee? beans? $____?(round your response to two decimal? places).

?c) What are the total annual ordering costs for Kona coffee? beans? ?$____ ?(round your response to two decimal? places).

?d) Assume that management has specified that no more than a 11?% risk of stockout during lead time is acceptable. What should the reorder point? (ROP) be? ____ pounds ?(round your response to two decimal? places).

e) What is the safety stock needed to attain a 11?% risk of stockout during lead? time? ____ pounds ?(round your response to two decimal? places).

?f) What is the annual holding cost of maintaining the level of safety stock needed to support a 11?% ?risk? ?$____ ?(round your response to two decimal? places).

?g) If management specified that a? 2% risk of stockout during lead time would be? acceptable, the safety stock holding costs will _______(decrease, increase, or not change)

Reference no: EM131806141

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