Question 1 (20 marks) - Inventory Management Let's assume you have been just hired to work for MusicChange Us Company. In your first week, you wanted to understand better the company's finished goods inventory account and because of that you decided to gather data on this account in order to perform the inventory management analysis. You noticed that MusicChange Us Incorporaton makes musical instruments and most of them are guitars. However, one of their very popular products is an acoustic guitar that has an annual demand of 4,000 units. The setup cost for each production batch is $1,500. In addition to that, it costs MusicChange Us $12 to carry a guitar in finished goods inventory for the whole year. Required: 1. What is the total annual relevant batch set up and carrying cost if the company uses the economic order quantity (EOQ)? Assume that setup costs are the same as ordering costs. 2. The company is switching to a just-in-time system (JIT). The average order size is 200 guitars. What is the total annual relevant batch set up and carrying cost? 3. Compare the company's EOQ model with the JIT model. What are the advantages and disadvantages of JIT model?