QUESTION 5Peet's Coffees in Menlo Park, California, sells Melitta Number 101 coffee filters at a fairly steady rate of about 70 boxes of filters monthly. The filters are ordered from a supplier inTrenton, New Jersey. Peet's manager is interested in applying some inventory theory to determine the best replenishment strategy for the filters. Peet's pays $2.80 per box of filtersand estimates that fixed costs of employee time for placing and receiving orders amount to about $20. Peet's uses a 22 percent annual interest rate to compute holding costs.How large a standing order should Peet's have with its supplier in Trenton, and how often should these orders be placed?EOQ= 216.22Cycle=3in years

Given, Monthly 70 boxes i.e., Annual demand D = 70*12 = 840 Ordering cost S = $20 Holding cost H =…

Answered: Peet's Coffees in Menlo Park,…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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