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?
Consider a capital budgeting example with five projects from which to select. Let xi = 1
if project a is selected, 0 if not, for i = 1, 2, 3, 4, 5. Write the appropriate constraint(s)
for the following condition: If project 1 is chosen, project 5 must not be chosen.
When the ________ criterion is used, the maximum of the maximum payoffs is
selected.