Problem 1. A Target store orders diet Dr. Pepper from its Distribution Center in Rialto, California. The annual demand for Dr. Pepper is 160,000 cases, and it costs the Target store $50 to order. Target use 25% as its annual inventory holding cost percentage. The value for each case of Dr. Pepper is $4 at the Target store.

Question 1.1. What is the economic order quantity for Dr. Pepper in this Target store?

Question 1.2. If the Target store follows EOQ policy, what is the annual ordering cost?

Question 1.3. If the Target store follows EOQ policy, what is the annual inventory carrying cost?

Question 1.4. If the Target store follows EOQ policy, what is the average inventory level of Dr. Pepper?

Question 1.5. The Target Distribution Center is now imposing a new shipping requirement, which requires retail stores to order in truckloads. One truckload holds 3,000 cases of Dr. Pepper. How many cases of Dr. Pepper the Target store need to order if the goal is to minimize the EOQ costs?

Question 1.6. For the new order quantity from Question 1.5., what is the new annual ordering cost?

Question 1.7. For the new order quantity from Question 1.5., what is the new annual inventory carrying cost?