A large manufacturing firm uses two parts purchased from an external supplier. Part 1 costs $25/unit and is used in the firms assembly process at a uniform annual rate of 15,000 units, whereas, part 2 costs $5/unit and has a usage rate of 5,000 units/year. The major fixed ordering cost (including transportation charges) from this source is $500/order, applicable to all orders, and handling charges of $50/order for part 1 and $250/order for part 2. The applicable inventory holding cost rate is $0.30/unit/year. (a) The current ordering policy is based on a common cycle approach, with monthly orders (i.e. 12 order cycles/year). Each order consists of the necessary amount of each part. What is the lot size of each part in a monthly order and what is the annual total relevant cost resulting from this ordering policy? (b) To improve upon existing policy, an employee of the firm has proposed a basic cycle ordering approach for these two parts, maintaining the current 12 orders a year. It is suggested that part 1 be replenished every monthly order cycle and part 2, which has significantly lower usage rate and unit cost, but a higher handling charge, is to be ordered once every six cycles (i.e. replenished only twice a year). What replenishment policy? (c) If you are to design a better basic cycle based replenishment policy for these two parts, what should be the appropriate basic ordering frequency and the respective frequency multipliers and the lot sizes of the two items in question? Compute the annual total relevant cost and the average annual savings of your basic cycle policy, in comparison with the current common cycle approach. the annual total relevant cost that would result from this proposed