C. Optimal Ordering Policy and Cost Evaluation: The simple BOM procedure does not consider the economic perspectives of the procurement operation. Placing an order costs money and manpower. On the other hand, holding the inventory also incurs warehouse/carrying cost. Perform the daily cost analysis and show how would you give an economic plan for BOM for the company such that the total cost of ordering and carrying is minimized? Assume any reasonable data you need (say: placing an order costs $150/order and holding cost is assessed at 15% of component prices which are $2, $3, $1 and $4 per component per year for components Z, X, Y, and Z, respectively). [Hints, you may use EOQ, POQ, PPB or SM lot-sizing technique to analyze the daily cost. If you change these data, indicate them before any analysis].

W (30,2,1) X Y (40,2,3) LFT Part # (50,3.2) (10, L, N) F=100 Lot size 10: Beginning Inventory L-Leadtime, and N: Number of components needed for a parent product. z (70,1,2) V=150 Figure 2. MRP Tree for feeding components