Case $7(33/100$ p$.)$ Round all numbers to $2$ decimal places.

The northwestern division of ABC Ltd$.$ is responsible for providing dependable electric service to

customers in and around the area of Greater Toronto. One material used extensively to provide this

service is the $\frac{1}{0}$ AWG aluminum triplex cable, which delivers the electricity from the distribution

pole to the meter loop on the house. The northwestern division purchases the cable that this division

will use. For the coming year, this division will need $600,000$ meters of this service cable. The

current cost of this cable is $$1\mathrm{.}2$ per meter. Under the present arrangement with the supplier, the

division simply takes one twelfth of its annual need every month. Associated with each shipment are

ordering costs of $$50,$ which include all the costs from making the purchase requisitions to issuing a

check for payment. In addition, inventory carrying costs $($including taxes$)$ on all items are considered

to be $2\mathrm{.}5\%$ of the purchase price per unit per quarter. Because ABC is a government$-$regulated,

investor$-$owned utility, both the Ontario public services and its stockholders watch closely how

effectively the company, including inventory management, is managed.

a$.(16$ p$.)$ Calculate the total annual inventory cost under the current ordering system. Show all your

calculations.

$(17$ p$.)$ Can the current system be improved? If so$,$ how? Show all your calculations. Fully discuss

your results.