PassTheHoney imports honeycombs from Turkey to sell convenient honeycomb snacks. They have two stores, one in San Diego and one in LA. In both cities, the weekly demands are very similar and remarkably stable over time without uncertainty. Each week, PassTheHoney has been selling 2000 boxes of honeycombs in each city. One year is 52 weeks. Each store orders separately from their supplier in Turkey.

In both stores, PassTheHoney sells one box of honeycombs at $20 to customers, whereas the cost of one box of honeycombs is $4. When placing an order to their supplier in Turkey, the fixed cost of shipping regardless of the order size is $1500. The annual cost of capital for PassTheHoney is 15%.

(i) For the store in San Diego, what is the optimal order size for each order? What is the annual shipping cost for the San Diego store? (ii) Now, PassTheHoney integrates two stores into one and places orders for the integrated store. What is the optimal order size for the integrated store? What is the annual inventory holding cost for the integrated store? (iii) What is the average ow time of honeycombs in the San Diego store in part (i)? What is the average flow time of honeycombs in the integrated store in part (ii)? Which one moves honeycombs through the store faster?