Gourmet Coffee (GC) is a specialty coffee shop that sells roasted coffee beans. It buys green beans, roasts them in its

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Gourmet Coffee Gc Is A Specialty Coffee Shop That Sells Roasted Coffee Beans It Buys Green Beans Roasts Them In Its 1 (107.93 KiB) Viewed 53 times

b) If the investment were made, what should be the optimal
order policy for GC - in particular, what is the optimal order
quantity?
Gourmet Coffee (GC) is a specialty coffee shop that sells roasted coffee beans. It buys green beans, roasts them in its shop, and then sells them to the consumer. GC estimates that it sells about 150,000 pounds of coffee per year. Green beans cost about $1.50 per pound. In addition, there is a shipping charge that GC pays its supplier according to the following schedule: Quantity Shipped Shipping Cost per Pound Less than 10,000 pounds $0.17 Less than 15,000 pounds $0.15 More than 15,000 pounds $0.13 GC estimates its cost of inventory at 15% per year. The administrative cost of placing an order (fax/phone/billing) and receiving the goods and so on is about $50 per order. In addition, to receive a shipment into its shop, GC rents a forklift truck for $350.