Question: Powered by Koffee ( PBK ) is a new campus coffee store. PBK purchases its coffee from a local supplier, Phish Roasters, for a price
Powered by Koffee PBK is a new campus coffee store. PBK purchases its coffee from a local supplier, Phish Roasters, for a price of $ per bag. PBK has to pay a cost of $ for every delivery order independent of the order size. The holding cost due to warehousing expenses is $ per bag per month on average. The current market price for the coffee sold by PBK is $ per bag. Moreover, PBK estimates that the cost of good will is $ per bag if PBK does not satisfy the market demand. Assume for simplicity that each order takes exactly months to arrive. PBK estimates the monthly demand for its coffee has a normal distribution with a mean of and a standard deviation of Assume for simplicity that the demand for each month is independent from each other.
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