Question: QUESTION 3 [17 Marks] As an inventory manager, you are obligate on the order of a raw material used in the production line. The daily

QUESTION 3 [17 Marks]

As an inventory manager, you are obligate on the order of a raw material used in the production line. The daily demand of the raw material is 420 units, a setup cost per production run is RM180, a monthly holding cost per unit is RM4.80, and an annual production rate is 375,000 units. The plant operates and experience demand 360 days per year. However, suppose that the purchasing manager mistakenly used the basic economic quantity model to calculate the batch size instead of using production order quantity model. How much value (in monetary) per year has that mistake cost the company? Explain what you have learned from this mistake. (Hint: Provides your answers in two decimal points) (17 marks)

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