What are total annual ordering costs for kona coffee? beans

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Reference no: EM132250639

A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 73 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? = $15 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 for? z-values.

a) What is the economic order quantity? (EOQ) for Kona coffee? beans? (Round answer to nearest whole number

b) What are the total annual holding costs of stock for Kona coffee? beans? (Round answer to 2 decimal places)

c) What are the total annual ordering costs for Kona coffee? beans? (Round answer to 2 decimal places)

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? (Round answer to 2 decimal places)

e) What is the safety stock needed to attain a 1% risk of stockout during lead? time?

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

g) If management specified that a 2% risk of stockout during lead time would be acceptable, would the safety stock holding costs decrease or increase?

Reference no: EM132250639

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