ALVIC is one of the huge companies that manufactures home small appliances. The company's products are popular not only in USA, but also in Europe and Asia. ALVIC purchases a crucial component for one of its most popular products from a vendor inAsiaand company needs 2,250 units ofthis component annually. ALVIC's carrying cost per unit per year is estimated to be 15% of the cost of the item. Currently, the vendor charges ALVIC $60 per unit and company incurs $20 every time an order is placed from the vendor. The replenishment lead time for the component is 15 days and ALVIC operates250daysayear.Basedontheforegoing data,provideyourresponsestoeachof the following questions and show your work to determine your responses.

1. WhatistheEconomic orderquantityforthis component?
2. WhatisALVIC's totalannualcostofordering andholdinginventory when Economic order quantity is used?
3. WhatisALVIC's totalannualcost,includingthecostofthecomponents purchased?
4. Supposethevendor proposesthefollowingquantitydiscounttoALVIC:ifALVIC places orders of 200 units or more in each replenishment, the vendor will charge ALVIC only $55 per unit.
   1. Whatistheoptimalorderquantitythatminimizestheannualcostof ordering, inventory carrying, and purchasing if ALVIC accepts this proposal? What is the resulting annual total cost?
   2. ShouldALVICaccept thisproposal?Explain clearlywhyorwhynot.