Part $2$: $-$ Read the below Question and answer the given questions basis the

formula of EOQ and Re order point.

The $xYZ$ Company purchases a component used in

the manufacture of automobile generators directly

from the supplier. $xYZ$ s generator production,

which is operated at a constant rate, will require

$1,200$ components per month throughout the year.

Assume ordering costs are $$25$ per order, item cost

is $$2\mathrm{.}00$ per component, and annual inventory$-$

holding costs are charged at $20$ percent. The

company operates $250$ days per year, and the lead

time is five days.

a$.$ Compute the EOQ, total annual inventory$-$

holding and ordering costs, and the reorder

point.

b$.$ Suppose $xYZ\text{'}$s managers like the operational

efficiency of ordering in quantities of $1,200$

items and ordering once each month. How

much more expensive would this policy be

than your EOQ recommendation? Would you

recommend in favor of the $1,200-$item order

quantity? Explain. What would the reorder

point be if the $1,200-$item quantity were

acceptable?