Powered by Koffe (PBK) is a new campus coffee store. PBK uses 14,000 bags of whole bean coffee every year, and you may assume that the demand is perfectly steady throughout the year. PBK has signed a year-long contract to purchase its coffee from a local wholesaler, Phish Roasters, for a price of $120 per bag and a $60 fixed cost of placing an order which is independent of the size of the order. The holding cost due to storage etc. is 15% per year. Assume 1 year is 12 months, and 1 month is 4.1 weeks. (a) What is the optimal order size in bags? EOQ = square root (2)*(60)*(14000) / 18 306 (b) Given your answer in (a), how many times does PBK order in a year? 306/14000 = 0.02185714 yrs per order 1yr/0.0219 46 orders per year (c) Given your answer in (a), what is PBK's ordering cost for one year? (14,000*60)/306 = $2745.10 (d) Given your answer in (a), on average, how many dollars per year does PBK spend to hold coffee beans? 306/2*18 = $2754 (e) Determine the reorder level (reorder point) if the replenishment lead time is two weeks. (f) Determine the optimal total cost in a year. (g) A South American import/export company has offered PBK a deal for next year. PBK can buy a years' worth of coffee at one order from them for $100 per bag and a fixed cost of $8,000. Who should PBK order from for the next year; continue with Phish Roasters or switch to this South American import/export company? Quantitatively justify your answer (compare total annual costs). This is what I have so far but I'm struggling with F & G