6-27 & 6-28 information provided. Please help with 6-29

6-27 Ross Whites machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost), and the ordering cost per order is $18.75. There are 250 working days per year.

6-28 Ross White (see Problem 6-27) wants to reconsider his decision of buying the brackets and is considering making the brackets in-house. He has determined that setup cost would be $25 in machinist time and lost production time and that 50 brackets could be produced in a day once the machine has been set up. Ross estimates that the cost (including labor time and materials) of producing one bracket would be $14.80. The holding cost would be 10% of this cost.

6-29 Upon hearing that Ross White (see Problems 6-27 and 6-28) is considering producing the brackets in-house, the vendor has notified Ross that the purchase price would drop from $15 per bracket to $14.50 per bracket if Ross would purchase the brackets in lots of 1,000. Lead times, however, would increase to 3 days for this larger quantity.

What is the total annual inventory cost plus purchase cost if Ross buys the brackets in lots of 1,000 at $14.50 each?

If Ross does buy in lots of 1,000 brackets, what is the new ROP?

Given the options of purchasing the brackets at $15 each, producing them in-house at $14.80, and taking advantage of the discount, what is your recommendation to Ross White?