If the order quantity is 80 bags, how often does GCH order? O a. Every 2 months O b. Every month O c. Twice a month d. None of the above

Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Chapter16: Lean Supply Chain Management
Section: Chapter Questions
Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...
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Questions 42 to 44 relate to the following paragraph:
Raya's Coffee House (RCH) uses 40 bags of coffee beans every month, and demand is perfectly stable
(there is no uncertainty) throughout the year. So annual demand is 480 bags. RCH purchases coffee
beans from a local provider at $20 per bag, and there is a $100 fixed cost for every order. The holding
cost due to storage is $1 per bag per month. The cost of capital (i.e., opportunity cost) is
approximately 1 percent per month.
If the order quantity is 80 bags, how often does GCH order?
O a. Every 2 months
b. Every month
O c. Twice a month.
O d. None of the above
Transcribed Image Text:Questions 42 to 44 relate to the following paragraph: Raya's Coffee House (RCH) uses 40 bags of coffee beans every month, and demand is perfectly stable (there is no uncertainty) throughout the year. So annual demand is 480 bags. RCH purchases coffee beans from a local provider at $20 per bag, and there is a $100 fixed cost for every order. The holding cost due to storage is $1 per bag per month. The cost of capital (i.e., opportunity cost) is approximately 1 percent per month. If the order quantity is 80 bags, how often does GCH order? O a. Every 2 months b. Every month O c. Twice a month. O d. None of the above
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