Question 2 SIMTECH Ltd uses the economic order quantity (EOQ) model to establish the reorder quantity for raw material Z. The company holds no buffer inventory. Information relating to raw material Z is as follows: Annual usage Purchase price Order costs Annual holding costs 144,000 units 40 per unit 80 per order 10% of the purchase price Required: a. Calculate: i. The EOQ for raw material Z. ii. The total annual cost of purchasing, ordering and holding inventories of raw material Z. The supplier has offered SIMTECH Ltd a discount of 1% on the purchase price if each order placed is for 6,000 units. 5. Calculate: i. The total annual cost of purchasing, ordering and holding inventories of raw material Z if SIMTECH Ltd accepts the offer of the discount. ii. The total annual saving to SIMTECH Ltd of accepting this discount offer.