QUESTION TWO $[25]2\mathrm{.}1$ Xolani Power, an international distributor of solar powered generators, expects to sell $12500$ units annually. Carrying costs are R$50\mathrm{.}00$ per unit and the order cost is R$65\mathrm{.}50.$ Xolani Power works $302$ days per annum.

Determine:

$2\mathrm{.}1\mathrm{.}1$ The Economic Order Quantity $($EOQ$)(5)$

$2\mathrm{.}1\mathrm{.}2$ The number of orders per year $(3)$

$21.\mathrm{.}3$ The length of the order cycle $(2)$

$2\mathrm{.}2$ Read the following extract and answer the question that follows: Nike$$s Excess Inventory Problem As one of the most recognised athletic brands in the world, Nike has a lot of goods to manage. And as a result, it has had difficulty keeping inventory under control. In the early $2000$s$,$ the company adopted an updated inventory management software after losing around $$100$ million in sales due to issues with tracking goods. The software promised to help Nike predict items that would sell best and prepare the company to meet demands, but bugs and data errors resulted in incorrect forecasts and led to millions more lost.

Nike$$s case illustrated just how crucial it is to manage inventory as well as your inventory management system properly. When choosing an inventory management solution, it$$s vital to ensure the quality of software that your vendor provides and that it is accurate, flexible, and customized for your business. It needs to be able to grow and change as the business and the customer base changes.

Nike continues to have issues with inventory. $2016$ was a challenging year for the retailer, as Nike's gross margin declined due to a higher percentage of discounted sales because of inventory management problems. The retailer continues to take steps to control their inventory management practices through manufacturing overhauls better and allowing new technology to bring manufacturing to the digital age. Ultimately Nike will remain a global leader as it keeps on exploring new markets, innovating new products and generating its supply channels.

Identify the costs associated with inventory and explain how ABC analysis could be used at Nike. $(15)$