Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffee beans

A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffee beans a day. (Demand can be assumed to be distributed normally with a standard deviation of 14 pounds per day). After ordering (fixed cost = $19 per order), beans are always delivered from Hawaii in exactly 4 days. Per-pound annual holding costs for the beans are $3. Refer to the standard normal tableLOADING... for z-values. Part 2 a) What is the economic order quantity (EOQ) for Kona coffee beans? enter your response here pounds (round your response to the nearest whole number). Part 3 b) What are the total annual holding costs of stock for Kona coffee beans? $ enter your response here (round your response to two decimal places). Part 4 c) What are the total annual ordering costs for Kona coffee beans? $ enter your response here (round your response to two decimal places). Part 5 d) Assume that management has specified that no more than a % risk of stockout during lead time is acceptable. What should the reorder point (ROP) be? enter your response here pounds (round your response to two decimal places). Part 6 e) What is the safety stock needed to attain a % risk of stockout during lead time? enter your response here pounds (round your response to two decimal places). Part 7 f) What is the annual holding cost of maintaining the level of safety stock needed to support a % risk? $ enter your response here (round your response to two decimal places). Part 8 g) If management specified that a 2% risk of stockout during lead time would be acceptable, the safety stock holding costs will decrease increase not change

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Service Management Operations, Strategy, Information Technology

Authors: James A Fitzsimmons, Mona J Fitzsimmons

6th Edition

0077228499, 9780077228491

More Books

Students also viewed these General Management questions