Question 3.2 Assuming all costs other than the order costs remain the same, calculate the following amounts for year 4: (i) Economic order quantity (EOQ), (ii) Reorder point in units (ROP) and (iii) Minimum annual relevant cost of ordering and carrying at the E00 level. (6 marks) Your Answer: Question 3.4 One of the senior management members, Rob Harrison, is sceptical about JIT implementation and raised several questions such as: how can the company save money if the order size is reduced and the number of orders delivered increased?; how the risk of running down the inventory levels be managed?; and how will these changes impact on the company's strategic priority of product quality and customer satisfaction? Write a report to the Senior Management responding to Mr Harison's concern. Your responses should explain the rationale behind improving supplier relationships and the likely impact of introducing a JIT system in line with the company's strategic priority and the calculations above. (8 marks) [Word limit: 150 words. Note the word count at the end of your answer] Your Answer (expand the space as required): Part B Cintra Company sells car cooling systems. Exhausts are purchased from a manufacturer in Japan and shippe to Cintra. Management is expecting an annual demand of 6500 units with a purchase price of $400. Othe costs associated with ordering and maintaining an inventory of these cooling systems are shown below. - The ordering costs incurred in the purchase order department for placing and processing orders for the past three years are shown below. Orders placed and processed Total processing costs 512.305 -__ 103 - Management expects these ordering costs to increase by 20 per cent over the amounts and rate experienced in the last three years. - Each order is inspected by NZ customs officers. A fee of $67.20 is charged. - A clerk in the receiving department receives, inspects and secures the coolings as they arrive from th manufacturer. The activity requires 3 hours per order received. This clerk has no other responsibilitie and is paid at the rate of $34 per hour. Related variable overheads in this department are applied at rate of $9 per hour. - Additional warehouse space will have to be rented to store the new cooling systems. Space can be rente as needed in a warehouse at an estimated cost of $3,500 per year plus $6.25 per cooling. - Breakage cost is estimated to average $5 per cooling. - Insurance on the inventory costs $1.50 per cooling. - Other carrying costs amount to $9.50 per cooling. Cintra works 50 weeks each year with five working days a week . Five working days are required from the time the order is placed with the supplier until it is received