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A Starbucks coffee shop in downtown Charleston is open 200 days a year and sells an average of 75 pounds of Veranda coffee beans daily.
A Starbucks coffee shop in downtown Charleston is open 200 days a year and sells an average of 75 pounds of Veranda coffee beans daily. (Demand can be assumed to be distributed normally with a standard deviation of 15 pounds per day). After ordering (fixed cost = $16 per order), beans are always shipped from Brazil within exactly 4 days. Per-pound annual holding costs for the beans are $3. What is the economic order quantity (EOQ) for Veranda coffee beans? [1 point] What are the total annual holding costs of stock for Veranda coffee beans? [1 point] What are the total annual ordering costs for Veranda coffee beans? [1 point] Assume that management has specified that 1% stockout risk is acceptable. What should the reorder point (ROP) be considering the given average daily demand and daily standard deviation? [2 points] What safety stock is needed to attain a 1% stockout risk during the lead time? [2 points] What is the annual holding cost of maintaining the safety stock level needed to support a 1% stockout risk? [1 point]
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