Orange Computer sells about 500,000 desktop computers per year. Its final assembly line operates 250 days per year and produces at a reasonably steady rate.The average production per working day is 2000 units and the standard deviation is 200.The motherboards for these computers (the same motherboard is used on all models) are assembled at a nearby supplier that charges $800 per unit.Orange is establishing a contract with a trucking company that charges $200 per truckload.Up to 4,000 motherboards will fit into a truck.Orange allows one working day as the lead time to account for truck loading and unloading, removing packaging from the motherboards, and inbound inspection.

Product life cycles are short, so Orange uses a 100% annual inventory holding cost rate for its motherboards.If Orange runs out of motherboards, it cannot assemble computers; each such shortage results in a loss of gross margin of about $500.The other computer components are much cheaper than the motherboard, so Orange maintains extremely high availability of the other components.

(a) The trucking company requires a constant time between shipments, which enables the trucking company to keep both its labor costs and its capital investments (for trucks) low.What is the time between shipments that Orange should specify to the trucking company, and what should the structure of Orange's ordering policy be?Please provide relevant numerical solutions.(16 points)

(b)The contract manufacturer has decided that labor costs in Silicon Valley are too high, so it now plans to produce the motherboards in China near a major airport.The price of the motherboard will fall to $750 (including shipping) and a fixed order quantity of 10,000 motherboards will be required.Orange will incur customs-related costs of $500 per shipment.The delivery lead time is expected to increase to 9 working days.

Recommend an inventory control policy (both the inventory control system and any numbers required to operate the system) for Orange to use after the contract manufacturer moves its operations to China.