A gourmet coffee shop in downtown Vancouver uses a PeriodicInventory System and is open 200 days a year. They sell on anaverage 75 pounds of KONA coffee beams a day. (Demand can beassumed to be distributed normally with a standard deviation of 15lbs. per day.) After (fix cost = $16 per order), beans are alwaysshipped from Hawaii within exactly 4 days. Per-pound annual holdingcosts for the beans are $3 and the cycle service level establishedby management is 98%. a. What is the economic order quantity (EOQ)for Kona coffee beans? b. Determine the Periodic Review Interval?c. What level of safety stock is required? d. What is the TargetInventory Level that is required to achieve these results? e. Whatare the total annual holding costs of stock for Kona coffee beans?f. What are the total annual ordering costs for Kona coffee beans?g. At the time the inventory was taken, the on hand was 300 lbswith the schedule receipts at 250 lbs with no back order. How muchshould the company order?
