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

question 27

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 their reorder point if they order at twice their EOQ?

• A) 46 cases
• B) 92 cases
• C) 184 cases
• D) 368 cases

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Definitions:

Potential Liability

The possibility of being responsible for some future obligation or facing legal penalties.

Specially Customized

Tailored or adapted for a specific purpose, user, or requirement, often involving unique modifications or designs.

Indemnification

A contractual obligation of one party to compensate for the loss incurred by another party due to specific acts or events.

Reimbursement

The act of compensating someone for an expense or loss, often by the original payer or a responsible third party.