Question 5(20 marks) Edal Ltd (Edal) is a manufacturer of electronic components. It produces one integrated circuit product called MX3. Edal forecasts that demand of MX3 in 2018 is 84,000 units. The unit variable production cost of MX3 is S45. Edal runs a MRP system and the monthly production plan of MX3 is in batches of 7,000 units each, with S10,000 setup cost per batch. The carrying cost of a unit in inventory is S15 per year Required: (a) Compute the annual cost of producing and carrying MX3 in inventory under the current MRP system. inventory. On average, half of the units produced by Edal in a month are in (3 marks) (b) Edal wants to replace the MRP system with the EOQ Model for determination of the optimal production batch size. The setup cost represents the ordering cost in the EOQ calculation. Based on this, compute the optimal batch size and number of batches to produce (round up to the nearest whole number). With the new optimal batch size under the EOQ Model, is there any cost savings to Edal in term of the annual cost of p and carrying MX3 in inventory? (9 marks) He suggests Edal to implement a JI system. From his analysis, the batch size of MX3 production will reduce to 750 units. To cope with the higher frequency of production batch, the operation team is required improve the production process including a reduction of the setup time. The setup cost is expected to be cut down to $500 per setup. What will be the annual cost of producing (c) A new plant controller joined Edal early this year