Kushie's Coffee in Bangalore Is a Quaint Establishment Nestled near MG

question 55

Multiple Choice

Kushie's Coffee in Bangalore is a quaint establishment nestled near MG Road in the central business district. It serves coffee and fruit cake to a clientele that has been enjoying these products for over fifty years. The demand for coffee beans is 6600 cases per year (each case has 24 ten-pound bags) . It would be disastrous for them to run out of coffee, so they keep a safety stock of 30 cases. The cases cost $4800 and it costs $5 per case to order coffee. As coffee is a perishable product, the holding cost is fairly high at $40/case/year. The lead time to receive an order is seven days. Kushie's is open 300 days a year.
-What is the increase in their EOQ if all of the model parameters (except the number of days in a year) double?

• A) 100%
• B) 33%
• C) 41%
• D) 50%

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Definitions:

Receiving Report

A document that records the details of goods received by a company, often used to verify shipments with purchase orders.

Materials Ledger

A detailed record keeping system that tracks the quantity and cost of materials on hand, received, and issued for production.

Service Organization

A business entity that primarily offers intangible products or services rather than physical goods.

Cost of Services

The total expense incurred to provide services, including labor, materials, and overhead.