Using the MRP system, what is the annual cost of producing and carrying J$-$Pods in inventory?

$($Assume that, on average, half of the units produced in a month are in inventory.$)$

A new manager at Value Gadgets has suggested that the company use the EOQ model to

determine the optimal batch size to produce. $($To use the EOQ model, Value Gadgets needs to

treat the setup cost in the same way it would treat ordering cost in a traditional EOQ model.$)$

Determine the optimal batch size and number of batches. Round up the number of batches to

the nearest whole number. What would be the annual cost of producing and carrying J$-$Pods in

inventory if it uses the optimal batch size? Compare this cost to the cost calculated in

requirement $1.$ Comment briefly.

Value Gadgets is also considering switching from an MRP system to a JIT system. This will

result in producing J$-$Pods in batch sizes of $330J-$Pods and will reduce obsolescence,

improve quality, and result in a higher selling price. Value Gadgets will reduce setup time and

setup cost. The new setup cost will be $$230$ per setup. What is the annual cost of producing and

carrying J$-$Pods in inventory under the JIT system?

Compare the models analyzed in the previous parts of the problem. What are the advantages

and disadvantages of each?