b$)$ Automated Technologies Ltd$.$ manufactures a wide range of products. Over the past number of weeks there have been continuous problems with $$stock$-$outs$$ of an expensive material F$40$ which is used on a number of its products. A task force has been set up to look at the implementation of a justin$-$time production and material ordering system.

However, in order to address the current problem, the company has decided to set stock levels for material F$40$ using the Economic Order Quantity $($EOQ$)$ model.

The following information has been estimated in relation to the material. Annual demand $30,000$ kilos per annum Purchase price $120$ per kilo Cost of placing one order $200$ Lead time $1$ to $3$ weeks Weekly demand $500$ to $700$ kilos Holding cost is estimated at $5\%$ of the purchase cost of material F$40.$

Requirement Calculate the following figures to allow the company to apply the EOQ model to material F$40.$

$($i$)$ The re$-$order level; $(2$ marks$)$

$($ii$)$ The economic order quantity; $(3$ marks$)$

$($iii$)$The minimum stock level; $(2$ marks$)$

$($iv$)$The maximum stock level; $(2$ marks$)$

$($v$)$ The average stock. $(1$ mark$)$

$($vi$)$ A supplier offers discounts of $0\mathrm{.}1\%$ for orders of $2,500$ kilos or greater.

The purchasing manager believes that this is too little of a discount and should not be considered. Should the company order $2,500$ units per order to avail of the price discount offered by its supplier?

You should show calculations to support your answer. $(3$ marks$)$ TOTAL $25$ MARKS