Question

I want only the answer to Q2 and Q3 please show your work step by step and show how did you do the graph in Q2

Q1). A specialty coffeehouse sells Colombian coffee at a fairly steady rate of 280 pounds annually. The beans are purchased from a local supplier for $2.40 per pound. The coffee house estimates that it costs $45 in paperwork and labor to place an order for the coffee, and holding costs are based on a 20 percent annual interest rate. a. Determine the optimal order quantity for Colombian coffee. b. What is the time between placement of orders? c. What is the average annual cost of holding and setup due to this item? d. If replenishment lead-time is three weeks, determine the reorder level based on the on-hand inventory.

Q2). For the situation described in Problem 1, draw a graph of the amount of inventory on order. Using your graph, determine the average amount of inventory on order. Also compute the demand during the replenishment leadtime. How do these two quantities differ?

Q3). A large automobile repair shop installs about 1,250 mufflers per year, 18 percent of which are for imported cars. (Assume a very steady demand rate.) All of the imported-car mufflers are purchased from a single local supplier at a cost of $18.50 each. The shop uses a holding cost based on a 25 percent cost of capital. The fixed cost for placing an order is estimated to be $28. a. Determine the optimal number of imported-car mufflers the shop should purchase each time an order is placed, and the time between placements of orders. b. If the replenishment lead-time is six weeks, what is the reorder point based on the level of on-hand inventory? c. The current reorder policy is to buy imported-car mufflers only once a year. What is the additional holding and setup cost incurred by this policy?

Answer 1

Answer 2:- Average inventory on order = Q(?/T) = 229×3/42.53 = 16

Demand during lead time = ?? = 280×3/52= 16

There is no difference between the two.

Qt/T = ??

Answer 3:-