QUESTION $2[$Total: $15$ marks$]$

New Esports is a wholesaler of electronic sports accessories. The annual demand for one popular gaming mouse is $5000$ units. The unit cost of this gaming mouse is RM$100,$ and the lead time is $10$ days. The holding cost per unit per year is $10\%$ of the unit cost, and the ordering cost per order is RM$1000.$ New Esports current policy is to order $500$ units each time an order is placed, and it operates for $300$ days per year.

a$)$ What is the total inventory cost including purchase cost for the current policy?

b$)$ What is the economic order quantity $($EOQ$)?$

$[3$ marks$]$

$[2$ marks$]$

c$)$ In minimizing the cost, how many orders will be made each year?

$[1$ mark$]$

Continued...

TCH $\frac{1}{4}$

GBB$6263$

MANAGEMENT DECISION SCIENCE

TERM ID $2410$

d$)$ What is the annual inventory cost including purchase cost using EOQ from $($b$)?[3$ marks$]$

e$)$ What is the Reorder Point $($ROP$)?$

$[1$ mark$]$

f$)$ New Esports can get a discount of $6\%$ on the cost per gaming mouse if it orders $1200$ units or more. Should New Esports take the quantity discount?

$[5$ marks$]$