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

question 48

Short Answer

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 reorder point for Kushie's if they reorder a quantity twice as high as their EOQ?

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Definitions:

Revenues

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing assets minus liabilities.

Net Income

The total profit of a company after all expenses, including taxes, have been deducted from revenue.

Accounting Equation

The fundamental principle of accounting that states assets equal liabilities plus equity, serving as the foundation for double-entry bookkeeping.