Question $1$

$($a$)$ Consider an organisation that experienced a stock$-$out or long customer waiting time for its product. Outline the inventory system it uses for this product. Based on what you have learned, describe ways to avoid possible stock$-$out or long customer waiting time.

$(8$ marks$)$

$($b$)$ TS Kitchen Appliance Company has $10$ different stores located in various parts of Singapore. Each store has an average demand of $300$ units of waffle machines per month. Each unit costs $$20.$ The shipping cost from the supplier in China is $$500$ each time. The holding cost per year is $15\%$ for any item in the stock.

$($i$)$ What is the EOQ for waffle machines?

$(5$ marks$)$

$($ii$)$ The supplier provides an all$-$unit quantity discount with a discount of $3\%$ for orders between $3,500$ units and $6,999$ units. The discount is more, at $5\%,$ for orders of $7,000$ units or more. Solve for the best order quantity for this situation. What is the annual cost?

$(12$ marks$)$