Question: a) Why is inventory management important? How does mismanaged inventory leads to costs to any organisation? (10 marks) Give examples to justify your answers.

a) Why is inventory management important? How does mismanaged inventory leads to

a) Why is inventory management important? How does mismanaged inventory leads to costs to any organisation? (10 marks) Give examples to justify your answers. (Please answer in 200-300 words). b) Reem owns a Carpet shop. She has beautiful carpets from across the world, however there is one model that is a favorite amongst her customers. The annual sales of this carpet is 500. The cost to place an order to replenish inventory is AED25 per order, and annual inventory holding cost per unit is AED20. (10marks) Assume that her store is open for 6 days a week. a. What is the optimal order size? b. What is the optimal number of orders per year? c. What is the optimal number of days between orders? d. What is the annual holding and setup cost?

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