Apply the EOQ model to the following quantity discount situation for which

D $=600$

units per year,

Co $=$ $$35,$

and the annual holding cost rate is $20\%.($Round your answers to the nearest integer.$)$

Discount

CategoryOrder SizeDiscount

$(\%)$Unit CostOrder Quantity$10$ to $990$$$10\mathrm{.}00$Q$1=2100$ or more$3$$$9\mathrm{.}70$Q$2=$

What order quantity do you recommend?

Q$1$Q$2$

Since Q$1$ is $---$Select$---$over$$under its limit of $99$ units, Q$1---$Select$---$is$$cannot be optimal.

$($a$)$

Determine the economic order quantity and total annual cost $($in $$)$ under the assumption that no backorders are permitted. $($Round your answers to two decimal places.$)$

Q$*=$TC$=$$

$($b$)$

Using a $$45$ per$-$unit per$-$year backorder cost, determine the minimum cost inventory policy and total annual cost $($in $$)$ for the model racing cars. $($Round your answers to two decimal places.$)$

Q$*=$TC$=$$

$($c$)$

What is the maximum number of days a customer would have to wait for a backorder under the policy in part $($b$)?$ Assume that the Hobby Shop is open for business $300$ days per year. $($Round your answer to two decimal places.$)$

days

$($d$)$

Would you recommend a no$-$backorder or a backorder inventory policy for this product? Explain.

Yes, the maximum wait is over a week long, but the cost savings of the backorder case is large enough to justify a long wait.Yes, the maximum wait is less than a week and the backorder case has a lower cost than the EOQ case.$$No$,$ the maximum wait is over a week long, which does not justify the cost savings of the backorder case.No$,$ the maximum wait is less than a week but the EOQ case has a lower cost than the backorder case.No$,$ the maximum wait is over a week long and the EOQ case has a lower cost than the backorder case.

$($e$)$

If the lead time is six days, what is the reorder point for both the no$-$backorder and backorder inventory policies? $($Round your answers to two decimal places.$)$

EOQr$=$Backorderr$=$