(Solved): A small coffee shop consumes on average 5000 bags of their most popular coffee beans each month. De ...

A small coffee shop consumes on average 5000 bags of their most popular coffee beans each month. Demand is normally distributed with the stand ard deviation of the monthly demand being 180 bags. The shop pays \( \$ 13 \) for each bag to the supplier. The cost of ordering and receiving shipments is \( \$ 16 \) per order. Accounting estimates annual inventory carrying cost is \( 30 \% \) of its value. The supplier lead time is a constant of 2 operating days. The shop operates 240 days per year, i.e., the shop operates 20 days each month. Each order is received from the supplier in a single delivery. The coffee shop uses a continuous review (i e., fixed-order quantity) inventory system and pays the supplier when the order is delivered (i.e., cash on delivery) There are no quantity discounts. Please keep two decimal places in your calculations. 1. What quantity should the shop order with each order? 2. How many times per year will the shop order on average? 3. How many operating days will elapse on average between two consecutive orders? 4. What is the store's minimum total annual cost of placing orders \& carrying inventory (cycle stock)? 5. The company currently carries a safety stock of 50 bags. What is the annual cost to carry the safety stock of 50 bags? 6. What is the standard deviation of demand duning the lead time period? 7. The coffee shop manager womies that the safety stock of 50 bags is too low and asks you for advice What is the safety stock if the coffee shop maintains a service level of \( 95 \% \) ? 8. What is the reorder point if the coffee shop maintains a service level of \( 95 \% \) ? 9. During the pandemic period, the supplier lead time has become more variable with the average lead time still being 2 days Everything else remains the same as in Question 8 . If you revisit the reorder point analysis, what do you expect the new reorder point should be compared to your answer in Question 8 ? Please circle one answer below. A. The reorder point will be higher with the fluctuating lead time B. The reorder point should remain the same. C. The reorder point should be lower with the fluctuating lead time. 10. During the pandemic period, the supplier has issues with its cash flow and the coffee shop agreed to pay the supplier at the time when the order is placed instead of cash on delivery. Everything else remains the same as in Question 9. How will the total inventory cost of the coffee shop change compared to the situation in Question 9? Please circle one answer below. A. The total inventory cost will be higher because the pipeline inventory will be accounted to the coffee shop. B. The total inventory cost should remain the same. C. The total inventory cost should be lower because the pipeline inventory will not be accounted to the coffee shop.