Question 1 (a) Saturn is a manufacturing company. The following information is available about J66, one of the raw materials used in manufacturing: Purchase price RM 9.60 per kg Usage per day High: 90 kg Average: 60 kg Low: 30 kg Delivery lead time (days) High: 6 days Average: 4 days Low: 2 days Maximum inventory level 4.000 kg In addition to a reorder level, Saturn has a minimum inventory level that acts as a safety inventory Required: Calculate the following for Saturn: (1) Teorder level (kg) (ii) minimum inventory level (kg) (iii) reorder quantity (kg) (iv) average inventory (kg) (v) average inventory (RM) (b) Botani Ltd. is budgeting to use 6,000 units of material during the year. Production will be distributed evenly throughout the year. The company does not carry any safety (buffer) levels of inventory. The following additional information is available: Cost of material RM60 per unit Ordering costs RM500 per order Inventory holding costs 8% of the average inventory value per annum Order sizes available 500, 1000, 1500, 2000 and 3000 units Required: (i) Complete the table to show the total annual ordering and inventory holding costs of material for each order size. (ii) Identify the optimum order size that would minimise total cost. (iii) The supplier is now proposing to supply the material only in quantities of 1,000; 2,000 or 3,000 units; and is willing to offer the following quantity discounts: Order size 1,000 2,000 3,000 Quantity 2.5% 3% 7.5% Required: Complete the table of inventory to show the annual costs for Botani Ltd. if the above quantity discounts are available. Identify the order quantity that would minimise costs