Question $2(50$ marks$)$

Read the scenario of $$Evaluating Order Quantities to Balance Inventory Costs$$

$(20$ marks$)$

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$(20$ marks$)$Evaluating Order Quantities to Balance Inventory Costs

In the bustling town of Riverdale, a specialty tea company named BrewMasters faced the challenge of determining the optimal ordering quantity for its premium tea leaves, considering price break conditions. The company aimed to minimize costs and enhance inventory efficiency.

BrewMasters' supplier provided price breaks based on order quantities. For orders less than $100$ units, the cost per unit was $$20.$ For orders between $100$ and $999$ units, the cost reduced to $$19$ per unit. Finally, for orders of $1,000$ units or more, the cost further decreased to $$18$ per unit.

To optimize their inventory management, BrewMasters' operations team analyzed several factors. They considered the annual demand of $3000$ units in the year of $2024,$ the cost of placing an order at $$40,$ and the holding cost, which amounted to $25\%$ of the unit price.

$($a$)$ Taking into account of the prescribed costings and demand information above, determine the optimum order quantity under EOQ model.

$($b$)$ In light of the scenario described under inventory management perspectives, discuss what factors should be considered when deciding whether to deploy a EOQ model above instead of a fixed$-$time period model for BrewMasters$$ business nature in the year of $2024.$

$($c$)$ In light of the scenario described under demand forecasting perspectives, discuss what factors should be considered when deciding whether to deploy a quantitative forecasting model instead of a qualitative forecasting model for BrewMasters$$ business nature in the year of $2024.$

$(10$ marks$)$

$(20$marks$)$

$(20$marks$)$