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Business, 27.04.2021 15:50 adamsc819

You run a coffee shop where demand is constant week to week. You use 10 bags of roasted coffee each week. Currently, you order whole roasted coffee beans from an out-of-town supplier who charges $20 per bag and a fixed cost of $100 per delivery. Storage for each bag per month is estimated at $1. Assume your coffee shop operates for 52 weeks and 12 months per year. Assume there are no lead times. Required:
a. Under these costs, what is the optimal order size (in bags)?
b. How often (in months) do I place an order under my solution to part a?
c. What are my annual total costs (including purchasing costs) under my solution to part a?

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