Q: A large local government authority places orders for various stationery items at quarterly intervals In respect of an item of stock coded A32, data are: . annual usage quantity 5000 boxes minimum order quantity 500 boxes cost per box 2 Usage of material is on a regular basis and on average, half of the amount purchased is held in inventory. The cost of storage is considered to be 25% of the inventory value. The average cost of placing an order is estimated at 12.5. The chief executive of the authority has asked you to review the present situation and to consider possible ways of effecting cost savings. . You are required to: (a) tabulate the costs of storage and ordering item A32 for each level of orders from four to twelve placed per year; (b) ascertain from the tabulation the number of orders which should be placed in a year to minimize these costs (c) produce a formula to calculate the order level which would minimize these costs; (d) calculate the percentage saving on the annual cost which could be made by using the economic order quantity system; (e) suggest two other approaches which could be introduced in order to reduce the present cost of storage and ordering of stationery