Spring Co expects annual demand for product X to be 138,720 units. Product X has a selling price of 20 per unit and is purchased for EB per unit from a supplier, Winter Co. Spring Co places an order for 30,000 units of product X at regular intervals throughout the year. Because the demand for product X is to some degree uncertain, Spring Co maintains a safety (buffer) stock of product X which is sufficient to meet demand for 28 working days. The cost of placing an order is 30 and the storage cost for Product X is 10 pennies per unit per year. Spring Co normally pays trade suppliers after 60 days, but Winter Co has offered a discount of 1% for cash settlement within 20 days. Spring Co has a short-term cost of debt of 10% and uses a working year consisting of 365 days. Required a. Calculate the annual cost of the current ordering policy (ignore financing costs in this part of the question). b. 10 Marks i. Calculate the annual savings if the economic order quantity (EOQ) model is used to determine an optimal ordering policy (ignore financing costs in this part of the question). 5 Marks ii. Critically discuss the limitations of the EOQ model as a way of managing inventory. 5 Marks c. Determine whether the discount offered by the supplier is financially acceptable to Spring Co. 5 Marks