-demand

Virtuazone is a primary online reseller of popular name-brand tablet PCs. Demand data over 12 months span are shown below for two of its steady-selling Tablets (Ultra-X & Extreme-X) purchased from TabX, a major Tablet PC manufacturer: Both tablets cost $250/unit from the manufacturer. The fixed ordering cost for tablets is $500 per order and the annual holding cost rate is 25% of the unit purchase cost. Lead time for the delivery of tablets is considered constant

a. (2 marks) Up until now, Virtuazone has been using Q=700 units each as the order quantity for Ultra-X and Extreme-X. Determine the total annual inventory related costs for each model when using (i) Q=700 for Ultra-X and (ii) Q=700 for Extreme-X.

b. (4 marks) You have been hired by Virtuazone as an inventory analyst to provide a better ordering policy. Based on what you learned in SCMT200, you propose that they implement an EOQ policy. Determine the (1) economic order quantities (EOQ) and (2) the total annual inventory-related costs for (i) Ultra-X and for (ii) Extreme-X.