Please answer the problem. Please give an explanation for the output with summary statements answering the questions!

Discount Mart Mini Case - Problem 16.5/16.6/16.7

A Nova Scotia retailer, Discount Mart, is determining inventory costs, EOQ, and order quantity specifications with one of its suppliers - Specialty Lighting Manufacturers. Discount Mart is instituting JIT and is assessing its impact on its operations.

Problem 1. Discount-Mart, a major East Coast retailer, wants to determine the economic order quantity (EOQ) for its halogen lamps. It currently buys all halogen lamps from Specialty Lighting Manufacturers, in Antigonish. The annual demand is 2000 lamps, the ordering cost per order is $30, and the annual carrying cost per lamp is $12.

a. What is the EOQ?

b. What are the total annual costs of holding and ordering (managing) this inventory?

c. How many orders should Discount-Mart place with Specialty Lighting per year?

Problem 2: Discount-Mart, as part of its new JIT program, has signed a long-term contract with Specialty Lighting and will place orders electronically for its halogen lamps. Ordering costs will drop to $0.50 per order, but Discount-Mart also reassessed its carrying costs and raised them to $20 per lamp.

a. What is the new EOQ?

b. How many orders will now be placed?

c. What is the total annual cost of managing the inventory with this policy?

Problem 3: How do your answers to Problems 1 and 2, provide insight into the JIT purchasing strategy?

Read the problems. Understand that in order to answer the seven questions at the end of the problems you will have to provide all relevant assumptions and POM for Windows V5 output to support your answers. In this case, use the POM for Windows V5 software to solve the first six questions. Remember to interpret the output with summary statements answering the questions! For Problem 16.7, provide an overall qualitative and quantitative assessment of how utilizing JIT impacts Discount Mart's operations.