Question 2) A company requires to calculate the costs if they move their operations to another country, i.e. moving from Country A to Country B. In Country A, the production of a unit product costs $75, whereas in Country B the same product can be produced at a cost of $65. The overall holding costs can be calculated based on 20% of annual interest rate, whereas the demand will be 200 units per week. If the setup costs are $200 at both Country A and Country B. Production lead time is 1 month in Country A and 6 months in Country B. Determine the average annual costs of production, holding, and setup at each countries assuming that an optimal solution is employed at each country. Based on these results only, which country is preferrable? Answer: Producing in country A costs approximately $788000, Producing in country B costs approximately $683000 ) Determine the value of the pipeline inventory at each country. (The pipeline inventory is the inventory on order) Does the comparison of the pipeline inventories alter the conclusion reached in part a)? Answer: The value of pipeline inventory in Country A is $65000, The value of pipeline inventory in Country B is $338000 ) Might considerations other than cost favour Country A over Country B? Answer: Still Country B will be more efficient in terms of all the costs)