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A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 76 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 = $17 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? pounds (round your response to the nearest whole number). b) What are the total annual holding costs of stock for Kona coffee beans? $ (round your response to two decimal places). c) What are the total annual ordering costs for kona coffee beans? $ (round your response to two 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? pounds (round your response to two decimal places). e) What is the safety stock needed to attain a 1% risk of stockout during lead time? pounds (round your response to two decimal places). f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? $ (round your response to two decimal places). g) If management specified that a 2% risk of stockout during lead time would be acceptable, the safety stock holding costs will

A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 76 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 = $17 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? pounds (round your response to the nearest whole number). b) What are the total annual holding costs of stock for Kona coffee beans? $ (round your response to two decimal places). c) What are the total annual ordering costs for kona coffee beans? $ (round your response to two 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? pounds (round your response to two decimal places). e) What is the safety stock needed to attain a 1% risk of stockout during lead time? pounds (round your response to two decimal places). f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? $ (round your response to two decimal places). g) If management specified that a 2% risk of stockout during lead time would be acceptable, the safety stock holding costs will

Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 76 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 = $17 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? pounds (round your response to the nearest whole number). b) What are the total annual holding costs of stock for Kona coffee beans? $ (round your response to two decimal places). c) What are the total annual ordering costs for kona coffee beans? $ (round your response to two 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? pounds (round your response to two decimal places). e) What is the safety stock needed to attain a 1% risk of stockout during lead time? pounds (round your response to two decimal places). f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? $ (round your response to two decimal places). g) If management specified that a 2% risk of stockout during lead time would be acceptable, the safety stock holding costs will
Transcribed Image Text:A gourmet coffee shop in downtown San Francisco is open 200 days a year and sells an average of 76 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 = $17 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? pounds (round your response to the nearest whole number). b) What are the total annual holding costs of stock for Kona coffee beans? $ (round your response to two decimal places). c) What are the total annual ordering costs for kona coffee beans? $ (round your response to two 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? pounds (round your response to two decimal places). e) What is the safety stock needed to attain a 1% risk of stockout during lead time? pounds (round your response to two decimal places). f) What is the annual holding cost of maintaining the level of safety stock needed to support a 1% risk? $ (round your response to two decimal places). g) If management specified that a 2% risk of stockout during lead time would be acceptable, the safety stock holding costs will
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