1) A specialty coffee house sells Colombian coffee at a steady rate of 285 pounds per...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1) A specialty coffee house sells Colombian coffee at a steady rate of 285 pounds per year. The beans are purchased from a local supplier for $3.00 per pound. An estimated $38 are spent in paperwork and labor each time an order is placed for the coffee beans, and holding costs are based on a 20 percent annual interest rate. The lead time for an order to arrive from the supplier is exactly 1 month after it is placed. a) b) c) d) e) Determine the optimal order quantity for the beans. On the average how many orders are placed annually? What is the time between placement of orders? What are the average annual costs of (1) holding, (2) setup and (3) purchase? What is the reorder point? The manager of the coffee house insists that the order cost of K-$38 is wrong. He claims that it is actually lower, and that orders should be placed more frequently; he suggests three equal orders each year. For what range of values of K is your EOQ (based on K=$38) preferable (in terms of a lower total order and carrying cost) to the manager's suggested ordering scheme? 1) A specialty coffee house sells Colombian coffee at a steady rate of 285 pounds per year. The beans are purchased from a local supplier for $3.00 per pound. An estimated $38 are spent in paperwork and labor each time an order is placed for the coffee beans, and holding costs are based on a 20 percent annual interest rate. The lead time for an order to arrive from the supplier is exactly 1 month after it is placed. a) b) c) d) e) Determine the optimal order quantity for the beans. On the average how many orders are placed annually? What is the time between placement of orders? What are the average annual costs of (1) holding, (2) setup and (3) purchase? What is the reorder point? The manager of the coffee house insists that the order cost of K-$38 is wrong. He claims that it is actually lower, and that orders should be placed more frequently; he suggests three equal orders each year. For what range of values of K is your EOQ (based on K=$38) preferable (in terms of a lower total order and carrying cost) to the manager's suggested ordering scheme?
Expert Answer:
Answer rating: 100% (QA)
a The optimal order quantity for the beans can be determined using the Economic Order Quantity EOQ formula EOQ 2DS H where D is the annual demand S is ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I
Posted Date:
Students also viewed these programming questions
-
A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 65 pounds per week. The beans are purchased from a local supplier for $4 per pound. The coffeehouse estimates that it costs...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Date 1 July 2019 1 June 2020 30 June 2020 1 July 2020 1 July 2020 30 June 2021 1 July 2021 Particulars (???) (???) (To record acquisition of delivery truck) (???) (???) (???) (To record minor repair...
-
1. A snow globe has a diameter of 6 inches. Find its exact volume. Then approximate its volume using 3.14 for Ï. 2. The face of a circular watch has a diameter of 2 centimeters. What is its...
-
Whitefish Inc. operates a fleet of 15 fishing boats in the North Atlantic Ocean. Fishing has been good in the last few years as has the market for product, so the firm can sell all the fish it can...
-
Which two types of intellectual property potentially last indefinitely? For the remaining two types that do not last indefinitely, how long do they last? Which types of intellectual property, if any,...
-
Daniels Consulting is going to manufacture billing software. During its first month of manufacturing, Daniels incurred the following manufacturing costs: Prepare a schedule of cost of goods...
-
24. A water jet whose cross section area is a striker wall making an angle e with the normal and rebounds elastically. The velocity of water of density d is v. Force exerted on wall is :- 0 (1) 2avd...
-
The following feature of a corporation with a vertical communication structure: a) senior communication personnel operate under senior executives for more direct reporting b) main communication...
-
Search and identify two sources (blogs/video) that you find useful to enhance your negotiation and conflict resolution skills. Write a short essay on why these sources are relevant and useful.
-
Carlos Lemus, 65 years old, and his wife, 50 years old, decide that they want to retire and spend the next few years, while they are still able, travelling around the globe and doing research on...
-
How do structural-functional theories elucidate the role of deviance in societal equilibrium and stability ?
-
How do contemporary perspectives in criminology integrate insights from various disciplines, such as psychology, sociology, and anthropology, to provide a comprehensive understanding of deviance in...
-
The mass of Parcel A is thrice the mass of Parcel B. If Parcel A is 12kg heavier than Parcel B, what is the total mass of both parcels
-
The conversion of mass to energy in the Sun is not 100% efficient. As we have seen in the text, the conversion of four hydrogen atoms to one helium atom results in the conversion of about 0.02862...
-
Should U.S. antidumping laws be stated in terms of average total costs or average variable costs?
-
What is the definition of a restructuring plan?
-
What is the most popular method of depreciation or amortization in Canada?
-
What are the two primary conditions that must be satisfied for a noncurrent asset to be reclassified as a held- for- sale current asset?
-
At what annual rate would the following have to be invested? a. \($820\) to grow to \($1,988.12\) in 13 years b. \($320\) to grow to \($423.10\) in 6 years c. \($57\) to grow to \($290.30\) in 18...
-
To what amount will the following investments accumulate? a. $6,000 invested for 12 years at 12 percent compounded annually b. $7,500 invested for 8 years at 8 percent compounded annually c. $6,400...
-
If youd like to have $5,000,000 at retirement in 45 years and you expect to earn 10 percent annually, which is around the average return over the past 50 years, what lump sum would you have to invest...
Study smarter with the SolutionInn App