Question 7 (15 points) 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? (5 points)

(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? (5 points) (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? (5 points)

PassThelloney imports haneycombs from Turkey to sell convenient honeycomb snacks. They have two stores, one in San Diego and one in LK. In boch cities, the weekly demands are very similar and remarkably stable over time without uncertainty. Each woek, PassTheHoney has been selling 2000 boxes of honeycombs in each sity. One year is 52 weeks. Each store arders separately from their supplier in Turkey. In boch stares, PastheHoney sells con box of honeycombs at $20 to customers, whereas the cost of one bex of honeycombs is 54 . When placing an order to their supplier in Turkey, the fixed cast of shipping regardless of the order size is $1500. The anaal cost of capital for PastTheffaney is 15%. (i) For the more in San Disco, what is the opeimal onder size for each onder? What is the annual shipping cost for the San Diego stare? ( 5 poinss) 3 (ii) Now, PassTheHaney integrates two stores into one and places orders for the integrated store. What is the optimal coder size for the integrated store? What is the annual inventory holding cost for the integrated store? (5 points)