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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 5000 bags of coffee beans each month. The shop pays $13 for each bag to the supplier. The cost of ordering and receiving shipments is $16 per order. Accounting estimates annual inventory carrying cost is 30% of its value. The supplier lead time is a constant of 5 operating days. The shop operates 240 days per year, i.e., the shop operates 20 days each month. Each order is received from the supplier in a single delivery. The coffee shop uses a continuous review (i.e., fixed-order quantity) inventory system and pays the supplier when
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 two 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 50 bags. What is the annual cost to carry the safety stock of 50 bags?the order is delivered (i.e., cash on delivery). There are no quantity discounts.
f. The company currently carries a safety stock of 50 bags. What is the reorder point?
g. the coffee shop decided to switch its supply to a small coffee farm in South America. Due to the change of supply, the cost of ordering and receiving shipments is increased to $26 per order. All the other cost parameters remain the same. What quantity should the shop order with each order to the South American coffee farm?
h. How much additional total annual cost of placing orders & carrying inventory (cycle stock) should the coffee shop pay if they switch to the South American coffee farm (relative to the cost in part d)?

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