Groundz Coffee Shop Uses 4 Pounds of a Specialty Tea

question 1

Essay

Groundz Coffee Shop uses 4 pounds of a specialty tea weekly; each pound costs $16. Carrying costs are $1 per pound per week because space is very scarce. It costs the firm $8 to prepare an order. Assume the basic EOQ model with no shortages applies. Assume 52 weeks per year, closed on Mondays.
a. How many pounds should Groundz order at a time?
b. What is total annual cost (excluding item cost) of managing this item on a cost-minimizing basis?
c. In pursuing lowest annual total cost, how many orders should Groundz place annually?
d. How many days will there be between orders (assume 310 operating days) if Groundz practices EOQ behaviour?

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Definitions:

Self-Motivation

Self-Motivation is the internal drive that propels an individual to pursue goals and tasks without external incentives or prompts.

Self-Efficacy

A person's confidence in their ability to carry out actions needed to achieve certain performance goals.

Declarative Knowledge

Information or facts that an individual knows, which can be stated or described, such as events, dates, or concepts.

Knowledge Compilation

Knowledge Compilation is the process of integrating new information into existing cognitive schemas, making that information more accessible and usable for decision-making or problem-solving.