Paramount Limited is reviewing the purchasing policy for one of its raw materials as a result of a reduction in production requirement. The material, which is used evenly throughout the year, is used for the company's products; and the production of which is currently 285,000 units annually. Each finished unit of the product contains 0.4 kg of this material. It is expected that 5% of the material is lost in the production processes. Purchases are usually made through Letter of Credits and can be made in multiples of 1,000 kg, with a minimum purchase order quantity of 1,000 kg. The cost of this raw material depends upon the purchase order quantity as follows: Order quantity (kg) Cost per kilogram ($) 1,000 10.00 9.80 9.65 2,000 3,000 4,000 6,000 9.50 9.35 12,000 9.20 Cost of placing and handling each order are $1,200, of which $300 is an apportionment of this cost which is not expected to be affected in the short term by the number of orders placed. Annual storage cost of stock is $20 per unit, of which only $16 is expected to be affected in the short term by the amount of stock held. The company expects that the machine setup cost for each production run is estimated to be $450 and the estimated cost of pilferage is $5 per unit. The bank will charge $250 for bill processing fee for each transaction and the company also estimates $3 per unit for the prevention of deterioration. In addition, the lead time for the raw material is one month, and a minimum 10,000 kg of safety stock is required. Required: (a) Determine the annual usage of material, ordering cost per order and holding cost per unit for Paramount Limited. (6 marks) (6) Determine the EOQ without considering the bulk purchase policy. (3 marks) Calculate the annual cost of pursuing alternative purchase order policy, and thus, advise Paramount Limited pertaining to the purchase order quantity for the material that will minimize cost. (13 marks) (d) Provide THREE underlying assumptions of economic order quantity (EOC) to the management of Paramount Limited