Rally Communications Company manufactures glass fibres used in the communications industry. The company's materials and parts manager is currently revising the inventory ordering policy for XL-20, one of the chemicals used in the production process. The chemical is purchased in 10-kilogram canisters for $95 each. The firm uses 4 800 canisters per year. The accountant estimates that the incremental costs of ordering and receiving XL-20 are $150 per order. The annual cost of storing XL-20 is $4 per canister. Required: 1. Use the EOQ formula to determine the optimal order quantity for XL-20. 2. What is the total annual cost of ordering and storing XL-2O at the economic order quantity? 3. How many orders will be placed per year? 4. Rally's accountant, Frank Mallard, recently attended a seminar on JIT purchasing. Afterwards, he analysed the cost of storing XL- 20, including the cost of wasted space and inefficiency. He was shocked to find that the real annual carrying cost was $20 per canister. Mallard then met with Doug Kaplan, Rally's purchasing manager. Together they contacted Chemical Industries, the supplier of XL-20, about a JIT purchasing arrangement. After some discussion and negotiation, Kaplan concluded that the cost of placing an order for XL-20 could be reduced to just $30. (a) Calculate the new EOQ for XL-20. (b) How many orders will be placed per year?