Agourmet coffee shop in downtown san francisco is open 200 days a year and sells an average of 77 pounds of kona coffee beans a day. (demand can be assumed to be distributed normally with a standard deviation of 14 pounds per day). after ordering (fixed cost = $14 per order), beans are always delivered from hawaii in exactly 4 days. per-pound annual holding costs for the beans are $2.
a) what is the economic order quantity? (eoq) for kona coffee beans? b) what are the total annual holding costs of stock for kona coffee beans?

a. 464 beans

b. $464

Explanation:

a. The computation of the economic order quantity is shown below:

=

where,

Annual demand = 200 days × 77 pounds = 15,400

And, all other items values would remain the same

Now put these values to the above formula  

So, the value would equal to

=

= 464 beans

The average inventory would equal to

= Economic order quantity ÷ 2

= 464 units ÷ 2

= 232 units

b. Holding cost = average inventory × carrying cost per unit

= 232 units × $2

= $464

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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