A gourmet coffe e shop in downtown San Francisco is open 200 days a year and sell s an average of 75 pounds of Kona coffee bea ns a day. (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 a lways shipped from Hawaii within exactly 4 days. Per-pound annual holding costs for the beans are $3.a) What is the economic order quantity (EOQ) for Kona coffee beans? b) What are the total annual holding costs of stock for Kona co!Tee beans?c) What are the total annual ordering costs for Kona co!Tee beans?d) Assume that management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point (ROP) be?c) 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 I% 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?
A gourmet coffe e shop in downtown San Francisco is open 200 days a year and sell s an average of 75 pounds of Kona coffee bea ns a day. (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 a lways shipped from Hawaii within exactly 4 days. Per-pound annual holding costs for the beans are $3.a) What is the economic order quantity (EOQ) for Kona coffee beans? b) What are the total annual holding costs of stock for Kona co!Tee beans?c) What are the total annual ordering costs for Kona co!Tee beans?d) Assume that management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point (ROP) be?c) 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 I% 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?
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...
Related questions
Question
| A gourmet coffe e shop in downtown San Francisco is open 200 days a year and sell s an average of 75 pounds of Kona coffee bea ns a day. (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 a lways shipped from Hawaii within exactly 4 days. Per-pound annual holding costs for the beans are $3. a) What is the economic order quantity (EOQ) for Kona coffee beans? b) What are the total annual holding costs of stock for Kona co!Tee beans? c) What are the total annual ordering costs for Kona co!Tee beans? d) Assume that management has specified that no more than a 1% risk during stockout is acceptable. What should the reorder point (ROP) be? c) 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 I% 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? |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning