Homework#7 Chapter #12 1. A jewellery manufacturer buys semi-precious stones. The supplier has quoted a price of $8 per stone for order quantities of 600 stones or more, S9 per stone orders of 400 to 599 stones, and $10 per stone for smaller order quantities. The jewellery manufacturer operates 250 days per year. Usage rate is 25 stones per day and ordering cost is $48 per order. (40) a) If annual holding cost is 30 percent of unit cost, what is the optimal order quantity? b) If lead time is six workdays, at what inventory level should be the company reorder? 2. a flower shop uses 200 clay pots a month. The pots are purchased for $3 cach. Annual holding cost is estimated to be 25 percent of purchased cost, and ordering cost is $25 per order. The manager has been using an order quantity of 300 flower pots. (40) a. Calculate the EOQ. b. Calculate the EOQ's total annual inventory control cost. c. What additional annual inventory control cost is the shop incurring by using the current order quantity? True/False 1. The principal objective of inventory management is to maximize customer service levels by ensuring items are available at all times. (10) 2. Holding or carrying cost is directly proportional to order size, as order size increases, so does the holding cost