Target - Two popular coffee brands sold at Target stores are SB and EO

These coffees are shipped to Target's DeKalb distribution center (DC) from their local warehouses

Cost of 12-oz coffees are $12 for SB coffee and $6 for EO coffee

Weekly demands at DeKalb DC are 200 packages for SB coffee and 300 packages for EO coffee

Assume DeKalb DC operates 52 weeks per year

Fixed cost of ordering any coffee is $400 per order (including transportation cost) - Additional ordering costs that depend on coffee brand are $300 for SB coffee and $300 for EO coffee

Inventory holding cost per package per year is 50% of the cost of coffee

Assume that there is no limit on truck capacity

Questions - Show Work

1. What is the optimal lot size (economic order quantity) of each coffee if DeKalb DC replenishes each coffee brand independently? -

2.What is the cycle inventory of each coffee at DeKalb DC?

3.What is the annual ordering cost of each coffee at DeKalb DC?

4.What is the annual holding cost of each coffee at DeKalb DC?