and wages paid to workers directly involved in changeover operations. Salaries for supervisory personnel involved amount to $1,500 a day. Although BIM products are generally regarded as high quality, intense price competition in the industry has forced the firm to embark on a costcutting and productivityimprovement campaign. In particular, BIM wants to operate with leaner inventories but with- out sacrificing customer service. Releasing some of the funds tied up in outputs inventory would allow BIM to invest in a new product development project that is expected to yield a riskadjusted return of 20%. Assume 50 workweeks in a year and 5 working days in a week. (a) Determine BIM's total annual cost of production and inventory control. (b) Compute the economic batch size and the resulting cost savings. 3. Victor sells a line of upscale evening dresses in his boutique. He charges $300 per dress, and sales average 30 dresses per week. Currently, Victor orders a 10week supply at one time from the manufacturer. He pays $150 per dress, and it takes 2 weeks to receive each delivery. Victor estimates his administrative cost of placing each order at $225. Because he estimates his cost of capital at 20%, each dollar's worth of idle inventory costs him $0.20 per year. (a) Compute Victor's total annual cost of ordering and carrying inventory. (1)) If Victor wishes to minimize his annual cost, when and how much should he order in each batch? What will be his annual cost? (c) Compare the number of inventory turns under the current and proposed policies. 4. A retailer estimates her xed cost for placing an order at $1,000. Presently she orders in optimal quantities of 400 units. She has, however, heard of the benefits of just-intimepurchasing - a principle that advocates purchasing goods in smaller lots as a means of keeping inventory down. If she wishes to order in lots no larger than 50, what should be her fixed ordering costs? 5. Major Airlines wants to train new flight attendants in an economically rational way. The airline requires a staff about 1,000 trained attendants to maintain in ight service. Due to the nature of the job, attendants have a high propensity to quit, with average job tenure being about 2 years, hence the need to train new