Question: QUESTION 5 The Adam Ali's law office has traditionally ordered 120 ink refills per year. The firm estimates its annual holding cost for this item

QUESTION 5 The Adam Ali's law office has

QUESTION 5 The Adam Ali's law office has traditionally ordered 120 ink refills per year. The firm estimates its annual holding cost for this item to be RM4 per unit. The cost to place and process an order from the supplier is RM40 and the price is RM60 per unit. a) Determine the optimal quantity b) Calculate its total annual inventory cost. c) After implementing good computer systems and paperless methods in the firm, the order of ink refills was reduced by 30%. Recalculate the new optimal quantity and the new total annual inventory cost. d) Suddenly, HP ink supplier offers year-end sales promotion. The supplier quotes a price of RM52 per ink refill for quantities of 400 or more, RM57 per ink refills for orders of 150 to 399 ink refills and no discount for orders of 149 or less ink refills. Should the firm take this promotion? (10 marks)

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