P9-19 Economic Order Quantity; Safety Stock; JIT Purchasing Impact (Appen- dix 9A) Hillclimber, Inc., manufactures a four-wheeler, off-road vehicle. The company pur- chases one of the parts used in the manufacture of the vehicle from a supplier located in another state. In total, Hillclimber purchases 18,000 parts per year at a cost of $30 per part The parts are used evenly throughout the year in the production process on a 360-day- per-year basis. The company estimates that it costs $75 to place a single purchase order and about $1.20 to carry one part in inventory for a year. Delivery from the supplier generally takes 9 days, but it can take as much as 13 days. The days of delivery time and the percentage of their occurrence are shown in the following tabulation: 406 The Central Theme: Planning and Control Delivery Time (days) 9 10 11 Percentage of Occurrence 70 12 6 6 13 Required a 1. Compute the EOO. 2. Assume that the company is willing to assume an 18% risk of being out of stock. What would be the safety stock? The reorder point? 3. Assume that the company is willing to assume only a 6% risk of being out of stock What would be the safety stock? The reorder point? 4. Assume a 6 stockout risk as stated in (3) above. What would be the total cost of or dering and carrying inventory for one year? 5. Refer to the original data. Assume that the company decides to adopt JIT purchasing policies, as stated in the chapter. This change allows the company to reduce its cost of placing a purchase order to only $6. Also, the company estimates that when the waste and inefficiency caused by inventories are considered, the true cost of carrying a unit in stock is $5.40 per year. a. Compute the new EOO. b. How frequently would the company be placing an order, as compared to the old purchasing policy