Question content area

Part $1$

A gourmet coffee shop in downtown San Francisco is open $200$ days a year and sells an average of $77$ 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 $$$$3.$ Refer to the standard normal table LOADING... for$$ 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 $5$

$$d$)$ Assume that management has specified that no more than a $1\%$ risk of stockout during lead time is acceptable. What should the reorder point$($ROP$)$ be$?$ enter your response here pounds $($round your response to two decimal$$ places$).$

Part $6$

$$e$)$ What is the safety stock needed to attain a $1\%$ risk of stockout during lead$$ time? enter your response here pounds $($round your response to two decimal$$ places$).$

Part $7$

$$f$)$ What is the annual holding cost of maintaining the level of safety stock needed to support a $1\%$risk$?$$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

$$

increase

not change

decrease

$.$