Question $2(3+2+2+2+6=15$ points$)-($Lead time, Reorder Point, Quantity Discounts$)$

You work at an appliance store and realize that the demand is stable and EOQ assumptions are

satisfied. You further collect the following data for the bestselling washer:

Average annual sales $=3000$ units

$,$ Ordering cost $=$$$300$ per order

Carrying cost $=20\%$ of the item cost per year

$,$ Item cost $=$$$400$ per unit

$,$ Lead time $=10$ days

Working days per year $=250$

a$)$ After noticing that the store's current inventory policy is suboptimal, you want to impress your

manager by making a proposal for improvement. What is the optimal order policy for this washer

$($write in the format of $R,Q^{**})?$

b$)$ What is the total ordering cost under the optimal order policy?

c$)$ What is the total holding cost under the optimal order policy?

d$)$ Consider your answers in part $b$ and $c.$ Which one of the following is correct $($circle one$)?$ Explain

why?

Total ordering cost$=$total holding cost

Total ordering cost$>$total holding cost

Total ordering cost$3\%$ discount $if$ you are willing $to$ receive shipments $of$ washers

every $6$ months. Would you take this discount $if$ you want $to$ minimize the annual total cost?