$6)$ For this question you are to make the following assumptions: First, estimated demand for the coming year is $30,000.$ Second, you have adopted an inventory policy that includes an EOQ of $3,000$ and a ROP of $6,000.$ Third, following your analysis of supplier information $($as you did in Q$4),$ you made a decision to use Alternative Supplier B$.$

a$)$ What are the expected annual costs for inventory management. The types of costs to be included are annual holding costs, annual ordering costs, and annual purchasing costs. Also, you will need to have access to data from the supplier information table that was used in your analysis for Question $4.$

b$)$ Based on your analysis in part a$,$ what are a few suggestions you feel are worthy of consideration to try to reduce the expected annual costs for inventory management? Inventory Management Information

The initial inventory for all sock styles combined at the beginning of FY$2021$ is $2,250$ units. You also

have information on current costs, which includes:

Order cost to Throx for an order placed with its current supplier, $$/$order $=S=$$$225$

Holding cost per set per year $=H=$$$2\mathrm{.}00$

The company currently pays $($P$)$ $$7\mathrm{.}60$ for each set of socks

The company uses a continuous review replenishment policy and has IT systems in place that allow

constant monitoring of key information. Last year, the company used a ROP under this policy of $1,900$

units for all sock styles and an order quantity $($Q$)$ of $5,000$ units for all sock styles.

Potential Alternatives to Current Supply Chain Management

The company has asked you to evaluate a number of alternatives to their current SCM practices,

including at a minimum their choice of supplier, transportation modes, order quantities and safety

stock, and warehouse capacity and location.

Supplier Information

The table below provides information relating to important characteristics of the current supplier. In

addition, the table includes the same types of information for two potential alternative suppliers in

China $($ A and B$)$ that have been contacted by Throx, The last column indicates the weights to be

considered for each supplier characteristic.

TBD $=$ to be determined $($calculated$)$ by students

Quality Performance Information

To conduct a quality performance assessment for each of these suppliers, Throx would like you to

determine the value of the Capability Index $(C_{pk})$ for each. The table below includes information that

will facilitate this analysis. Also, Throx has set a Target Sock Thickness: $8mm\frac{+}{-}\mathrm{.}5mm.$