World\'s Greatest Coffee EOQ Problem Anaturalfood store carbrand of coffee calle

Question

World's Greatest Coffee EOQ Problem Anaturalfood store carbrand of coffee called wond's Greatest Coffee. The following data should be used in your caloulations Demand/Sales10 canes of cofflee per week (you will need to convert this to an annual amount Ordering Cost$12 per order Carrying Charge . 18% per year Unit Cost $75 per cane Answer the following questions and be sure to show your computations You can use whatever symbol you need for square reot, i typing in Word . How many cases should be ordered at a time? (This number will be the EO0) 2. How olten should the coffee be ordered? 3 What is the annuall cost or ordering the coffee? What is the annual cost of carrying the cofee? And what is the total cost (ordering and carrying costs added together)? 4 What factors might cause the firm to order a larger or smaller amount than the EO0? Scoring- 20 possible poines Possible Points

Explanation / Answer

Demadn,d = 10 case/week = 52*10 Per Year = 520 Per Year

Ordering Cost, S = $12 per order

Caryying Cost , I = 18% per year

Unit Cost , C = $ 75 per case

1. EOQ , Q = Sqrt(2dS/IC) = Sqrt(2*520*12/(.18*75)) = 30.4 =30 case

2. Total Anuual Demand = 520 Cases

EOQ = 30 Cases

Frequency of ordering = Total Annual demand/EOQ = 520/30 = 17 times in year

3. Ordering Cost =( d/Q)*S =(520/30)*12 =$ 205 per Year

Carrying cost = I*C*Q/2 = 0.18*75*30/2 = $ 205

Total Cost = Ordering cost + Caryying cost = $410 Per Year

4.Factors that may impact the company to order either less or more amount than EOQ

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