Finite Production (EPQ) Brazos River Coffee Roasters (BRCR)…
Finite Production (EPQ) Brazos River Coffee Roasters (BRCR) produces its specialty cold brew concentrate in-house rather than purchasing it from an outside supplier. The roastery sells approximately 4,800 gallons of cold brew concentrate per year. When production begins, the facility is capable of producing at a rate equivalent to 12,000 gallons per year. Each time production is started, the company incurs a fixed setup cost of $250 per production run for cleaning, calibration, and labor preparation. The company estimates that the annual inventory holding cost is $4 per gallon per year, accounting for storage, refrigeration, and spoilage risk. The raw materials required to produce one gallon of concentrate cost $18 per gallon. The product sells for $30 per gallon. Assume steady demand, constant production rate, and no shortages.
Read Details