Electronics Ltd. manufactures air conditioners. It purchases 200,000 units of a particular type of compressor part, CU30, each year at a cost of $60 per unit. Annual carrying cost (for insurance, material handling breakage) per unit is 5% of the unit purchase price. Currently Electronics Ltd places 50 orders for 4,000 units each year and ordering costs per purchase order is $18.

Calculate

1. the current annual ordering costs 2 marks

b) the annual carrying costs 2 marks

c) the stock administration costs 2 marks

d) the EOQ 3 marks

e) the minimum ordering ordering cost 2 marks

f) the minimum storage cost 2 marks

g) the minimum total stock administration cost 2 marks

h) the cost savings for Electronics Ltd if it make use of the EOQ policy rather, than the current policy of purchasing 4,000 units per order. 3 marks