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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
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 bags. What is the annual cost to carry the safety stock of bags?the order is delivered ie cash on delivery There are no quantity discounts.
f The company currently carries a safety stock of 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 $ 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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