Simply Steak (B) recently expanded its menu at their premier Miami location by offering the new "Steak Valetta". The new addition requires a special spice rub made by mixing rosemary, salt, sage, lemon, fennel, garlic, marjoram and a secret ingredient. Simply Steak ( B uses 147.69oz of the spice rub during a typical week. The rub is purchased from SpiceSource in Evanston, IL. SpiceSource sells 1.5oz spice shaker jars for $3.60 or 10lb re-sealable spice bags for $288 each. [Note that 10z=0.0625lb ]. Based on the storage complexities involved in keeping the spice rub fresh, the holding cost per ounce for one year has been determined to be 24% of the cost price. The cost of ordering is quite low, at $2.88 per order, and safety stock is equal to 2 days of demand. Simply Steak $ is open 6 days a week throughout the year. a) Ignoring the cost of transportation from Evanston, what is the total annual cost of Simply Steak's (B) inventory policy? [20 points] b) As an incentive to a long-time customer, SpiceSource has offered to bear half the cost of transporting the spice rub to Simply Steak (B for one year, IF Simply Steak B agrees to order no less than 30 lb of the spice rub at a time. The dispatch department just obtained the following shipping costs from a nearby FedEx facility. Clearly show why Simply Steak(B) should OR should not take the offer from SpiceSource. [20 points] Simply Steak (B) recently expanded its menu at their premier Miami location by offering the new "Steak Valetta". The new addition requires a special spice rub made by mixing rosemary, salt, sage, lemon, fennel, garlic, marjoram and a secret ingredient. Simply Steak ( B uses 147.69oz of the spice rub during a typical week. The rub is purchased from SpiceSource in Evanston, IL. SpiceSource sells 1.5oz spice shaker jars for $3.60 or 10lb re-sealable spice bags for $288 each. [Note that 10z=0.0625lb ]. Based on the storage complexities involved in keeping the spice rub fresh, the holding cost per ounce for one year has been determined to be 24% of the cost price. The cost of ordering is quite low, at $2.88 per order, and safety stock is equal to 2 days of demand. Simply Steak $ is open 6 days a week throughout the year. a) Ignoring the cost of transportation from Evanston, what is the total annual cost of Simply Steak's (B) inventory policy? [20 points] b) As an incentive to a long-time customer, SpiceSource has offered to bear half the cost of transporting the spice rub to Simply Steak (B for one year, IF Simply Steak B agrees to order no less than 30 lb of the spice rub at a time. The dispatch department just obtained the following shipping costs from a nearby FedEx facility. Clearly show why Simply Steak(B) should OR should not take the offer from SpiceSource. [20 points]
