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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Peet’s Coffees in Menlo Park, California, sells Melitta Number 101 coffee filters at afairly steady rate of about 60 boxes of filters monthly. The filters are ordered from asupplier in Trenton, New Jersey. Peet’s manager is interested in applying some inventorytheory to determine the best replenishment strategy for the filters.Peet’s pays $2.80 per box of filters and estimates that fixed costs of employee timefor placing and receiving orders amount to about $20. Peet’s uses a 22 percent annualinterest rate to compute holding costs.a. How large a standing order should Peet’s have with its supplier in Trenton, and howoften should these orders be placed?
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