Kopi Luwak produces the world’s most expensive coffee by using coffee beans that have been digested by wild civet cat. The coffee beans, widely known as “cat poop coffee” can be packaged in one pound bag at a daily production rate of 700 bags. The coffees are shipped to retailers at a constant rate of 120 bags every day of the year. Due to the scarcity of part-digested coffee beans from civet cat feces, the senior operations manager, Dr. Hadiyan Wijaya Ibrahim, uses economic manufacturing quantity (EMQ) to produce the coffee. The setup cost is $250 per setup, and the annual holding rate is 25 percent. The manager estimates that the total cost of a bag of coffee is $85. If we assume that there are 360 days per year, what are the

(a) Annual demand,

(b) Emq,

(c) Highest inventory,

(d) Annual product cost,

(e) Annual holding cost,

(f) Annual setup cost,

(g) Total annual inventory cost,

(h) Length of a production period,

(i) Length of each inventory cycle,

(j) Rate of inventory buildup during the production cycle,

(k) The number of inventory cycles per year? Plot the movement of the inventory during one production cycle using time on the horizontal axis and on-hand inventory on the vertical axis (see Figure 7.10).