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A coffee roaster in Richardson has opened a retail store adjacent to the production plant. The plant manager wishes to optimize the inventory costs of

A coffee roaster in Richardson has opened a retail store adjacent to the production plant. The plant manager wishes to optimize the inventory costs of the companys best-selling coffee. The annual demand for the coffee is 36,000 bags and the plant works 240 days per yr. The plant can roast the coffee at a rate of 300 bags per day. The cost to prepare the equipment to start a production run is $350 and the annual inventory carrying cost is $3.6 per year. Use 2 decimal places in your calculations (if needed) and round your final answer to the closest whole number.

1. What should be the optimum quantity of coffee to produce?

2. What is the maximum inventory achieved during a production run?

3. How many production runs are needed to meet the annual demand?

4. What is the average inventory of coffee?

5. What is the minimum total annual cost of producing and storing the companys best-selling coffee?

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