Please show your work!

1) EPQ Scenario:

You operate the production line that supplies 91,250 specialty parts per year to one of the downstream processes. The process operates 365 days per year. The cost to configure the production line to make the specialty parts is $175 and the holding cost is $0.28 per year per part. You can produce 450 of these parts per day. You need to deliver 250 parts per day.

1a) If you used the EPQ to calculate order quantity it would be?

1b) What is the total annual inventory cost of the EPQ plan?

1c) There are several ways to analyze an EPQ policy. For the Cycle Time (Order Cycle), select all of the correct statements below:

• It is calculated as Q/p
• It is the time spent in producing the item.
• It is the time spent from starting production until the next time it starts.
• There is no such performance measure as cycle time.

1d) Another way to analyze an EQP policy is Maximum Inventory. Considering Maximum Inventory, select all of the correct statements.

• Q/D
• (Q*(p-d))/p
• It is the inventory level when production stops
• It the most inventory that will be held

1e) The final way to analyze an EPQ policy is Run Time. Considering Run Time, select all of the correct statements.

• It is the time to complete the batch.
• It is calculated as Q/p
• It is calculated at Q/D
• It is always longer than cycle time.

2) Quantity Discount Scenario:

You purchase a promotional item for a large business. You purchase 2,500 units a year. You estimate the cost to hold at 35% of the purchase cost because these take a lot of storage room. The ordering costs $25 per order. Your vendor gives you the following pricing information.

Order Quantity (units)	Unit Price
Less than 250	$35.00
250 to 999	$32.50
1000 or more	$30.00

2a) What is the calculated EOQ for the first price category? What is the calculated EOQ for the second price category? What is the calculated EOQ for the third price category?

2b) For the first price category ($35.00, for quantities between 1 and 249) which of the following statements are true? Select all that are correct.

• The EOQ is not Valid
• The EOQ is Valid
• Compute the total cost with the EOQ
• Compute the total cost with a Q = 249
• Use $32.50 as product unit price.

2c) For the second price category ($32.50, for quantities between 250 and 999) which of the following statements are true? Select all that are correct.

• The EOQ is not Valid
• The EOQ is Valid
• Compute the total cost using the EOQ
• Compute the total cost using Q = 250
• Use $32.50 as the product unit price

2d) For the third price category ($30.00, for quantities of 1000+) which of the following statements are true? Select all that are correct.

• The EOQ is not Valid
• The EOQ is Valid
• Compute the total cost with the EOQ
• Compute the total cost with a quantity of 1000
• Use $32.50 as the product unit price.

2e) What order quantity do you recommend? What is the total inventory cost (annual holding + annual ordering + annual product)?