Please answer and explain #5 using the numbers given in the problem.

You are an inventory manager with Alpha Enterprises and are responsible for sourcing part #3229. You currently purchase an annual 2,940 units of this item from supplier Beta. The holding cost per unit per year is equal to $96 (the inventory holding cost factor is 20% and the unit cost is $480), and the cost of placing an order is $3,290.

1. What is the economic order quantity for SKU #3229?

2. How many orders will be placed over the course of a year?

3. How much time elapses between order placements?

4. Due to a change in production processes, Beta announces that orders can be shipped in multiples of 100 units only, thus rendering the EOQ computed in Q.1 unfeasible. a. Should the new (cost-minimizing) order quantity be 400 or 500 units? b. What is the additional cost caused by the deviation from the EOQ?

5. The restrictions imposed on order quantities in Q.4 no longer apply. Alphas purchasing manager has been negotiating with supplier Beta and the latter has agreed to the following terms: Lower order placement costs ($1,200 instead of $3,290) and higher unit costs ($494 instead of $480). Is this a good deal for Alpha? Specifically: a. How do total relevant costs change in this scenario relative to the initial scenario? b. Please provide a brief written explanation for why this is or is not a good deal.

Parameters H Iy $ $ 2,940 96 3,290 S Question 1 448.90 units 43094.5379 EOQ G (EOQ) Question 2 # of orders/year 6.55 orders Question 3 Time b/w orders 55.7 days Question 4 Q2 400 $ 43,381.5 $ 43,345.2 Q3 500 a Cost-minimizing Q b Additional cost 500 units 250.66 $ if 400 Question 5 C new 494 $ $ S new 1,200 a Change in total costs $ b Explanation The cost