Question: HELP ASAP A coffee roaster in Austin TX has opened a retail store in Dallas TX. The plant manager in Austin wishes to optimize the

HELP ASAP

A coffee roaster in Austin TX has opened a retail store in Dallas TX. The plant manager in Austin wishes to optimize the inventory costs of the companys best-selling coffee. The annual demand for the coffee is 36,000 bags and the plant works 240 days per yr. The plant can roast the coffee at a rate of 300 bags per day. The cost to prepare the equipment to start a production run is $400 and the annual inventory carrying cost is $0.9 per year.

What should be the optimum quantity of coffee to produce?

The annual demand is normally distributed with the standard deviation of 5,000 bags. Let the shipments from Austin to Dallas take on average 5 days. The store in Dallas works 360 days a year.

If the store in Dallas aims to achieve 95% service level, how many bags of safety stock should be carried?

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