a)Using their current order quantity, calculate the current inventory management costs based upon actual demand in FY2017 aka use this as D.

b)Compare this cost to the costs to that would have been achieved if the company had used its forecast for FY2017 to calculate EOQ and ROP values (what you calculated in Question 3a). TIP: When calculating costs based upon the forecasted EOQ, use the actual demandas D in your total cost equation. This will ensure you find the true savings or increase that the company would have seen by using the EOQ value.

Product Orders (Demand) Informatiorn The company provides you with the following information for the past two fiscal years: Demand Characteristic Annual demand, units Average weekly demand, units FY 2016 FY 2017 16,00018,000 320 Variance of weekly demand, units80 360 90 Alternative Suppliers The company has contacted potential alternative suppliers in China, who have offered the following information relative to the current supplier: Supplier Characteristic Unit Price, $/3-sock set Order cost, $/ordeir Defect Rate Financial condition of the firmGood CurrentAlternative AAlternative B 3.00 $ 350.00$300.00$250.00 4.00$ 5.00$ 2.0% Poor 0.5% Fair 4.0% Supplier Characteristic Unit Price, $/3-sock set Order cost, $/order Defect Rate Financial condition of the firm 0.3 Weight 0.4 0.2 0.1 Product Orders (Demand) Informatiorn The company provides you with the following information for the past two fiscal years: Demand Characteristic Annual demand, units Average weekly demand, units FY 2016 FY 2017 16,00018,000 320 Variance of weekly demand, units80 360 90 Alternative Suppliers The company has contacted potential alternative suppliers in China, who have offered the following information relative to the current supplier: Supplier Characteristic Unit Price, $/3-sock set Order cost, $/ordeir Defect Rate Financial condition of the firmGood CurrentAlternative AAlternative B 3.00 $ 350.00$300.00$250.00 4.00$ 5.00$ 2.0% Poor 0.5% Fair 4.0% Supplier Characteristic Unit Price, $/3-sock set Order cost, $/order Defect Rate Financial condition of the firm 0.3 Weight 0.4 0.2 0.1