Question: Question 2. EOQ Model. (20 points) Stargucks purchase (2 lbs.) packages of regular coffee beans from one of its suppliers at a cost of $10

Question 2. EOQ Model. (20 points) Stargucks purchase (2 lbs.) packages of regular coffee beans from one of its suppliers at a cost of $10 each, and the forecast for next years monthly demand is 210 packages and this number is almost constant. Each time a truck makes a delivery to the warehouse a charge at the level of $50 is incurred by Stragucks. Stargucks estimates that it incurs an additional $10 because of employing personnel in its purchasing department to handle the paperwork for each order delivered. Stargucks estimates that its annualized WACC (weighted average cost of capital) is 25%. a) What quantity should be ordered each time? b) What is the total setup costs per year? c) What is the total holding cost per year? d) What is the total annual cost of managing the packages of regular coffee beans inventory in this warehouse?

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