2. A gourmet coffee shop in downtown SF is open 200 days a year and sells an average of 75
pounds of Kona Coffee beans a day. (Demand can be assumed to be distributed normally with a
standard deviation of 15 pounds/day.) After ordering (fixed cost = $16 per order), beans are
always shipped from Hawaii within exactly 4 days. Per-pound annual holding costs for the beans
are $3.
a) What is the economic order quantity (EOQ) for Kona coffee beans? (400)
b) What are the total annual holding costs of cycle stock for Kona coffee beans? ($600)
c) What are the total annual fixed ordering costs
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