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A coffee shop consumes on average 5 0 0 0 bags of coffee beans each month. The shop pays $ 1 3 for each bag
A coffee shop consumes on average bags of coffee beans each month. The shop pays $ for each bag to the supplier. The cost of ordering and receiving shipments is $ per order. Accounting estimates annual inventory carrying cost is of its value. The supplier lead time is a constant of operating days. The shop operates days per year, ie the shop operates days each month. Each order is received from the supplier in a single delivery. The coffee shop uses a continuous review ie fixedorder quantity inventory system and pays the supplier when the order is delivered ie cash on delivery There are no quantity discounts. Keep two decimal places in your calculations.
a What quantity should the shop order with each order?
b How many times per year will the shop order on average?
c How many operating days will elapse on average between consecutive orders?
d What is the stores minimum total annual cost of placing orders & carrying inventory cycle stock
e The company currently carries a safety stock of bags. What is the annual cost to carry the safety stock of bags?
f The company currently carries a safety stock of bags. What is the reorder point?
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