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6.? [See Appendix 6.2) Gourmet Coffee {CC} is a specialtyr coffee shop that sells roasted coffee beans. It buys green beans, roasts them in its
6.? [See Appendix 6.2) Gourmet Coffee {CC} is a specialtyr coffee shop that sells roasted coffee beans. It buys green beans, roasts them in its shop, and then sells them to the consumer. CC estimates that it sells about 150,000 pounds of coffee per year. Green beans cost about $1.50 per pound. In addition, there is a shipping charge that CC pays its supplier aocording to the following schedule: Quantity Shipping Cost Shipped per Pound Less than 10,000 pounds $0.1? Less than 15,000 pounds $0.15 More than 15,000 pounds $0.13 CC estimates its cost of inventory at 15% per year. The administrative cost of placing an order [faxfphonef billing} and receiving the goods and so on is about $50 per order. In addition, to receive a shipment into its shop, CC rents a forklift truck for $350. a. 1What is the optimal order quantity of beans for CC? 1iii-that is the total annual cost? I}. CC is considering buying a forklift and building a ramp that will allow it to eliminate the rental cost of a forklift. CC will have to borrow money to nance this investment. If the life of the equipment is approximatelyr five yea rs, how much money should EC be willing to spend to buy a forklift and build a ramp? If the investment were made, what should be the optimal order policyr for CC
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