MET Co demands 120,000 units of LOL a year, which is ordered monthly from its supplier with an order cost of 200. Each LOL costs 7.50 and the annual holding cost is 1 per unit. The company maintains a buffer stock of LOL, which is sufficient to meet the demand for 10 working days.

Required

(a) What is the optimal ordering policy? Evaluate the net benefit if it is adopted.

(8 marks)

(b) This year, the supplier informs MET that there is a discount of 36% on orders of 30,000 units or more. If MET orders that much, there is no need for holding buffer inventory any more but the annual holding cost per unit will increase to 2.20. Should the company accept the bulk purchase discount? Explain your answer using numerical evidence.

(7 marks)

(c) As a small business, MET uses Baumol model to manage cash. Define Baumol model and explain the benefits and limitations of using the model for cash management purpose.

(10 marks)

Note: I need the quality of this question plz provided data in an excel sheet if possible

Total: 25 marks