You are an inventory manager with Alpha Enterprises and are responsible for sourcing part #3229. You currently purchase an annual 2,000 units of this item from supplier Beta. The holding cost per unit per year is equal to $76 (the inventory holding cost factor is 20% and the unit cost is $380), and the cost of placing an order is $392.

1. What is the economic order quantity for SKU #3229?

1. How many orders will be placed over the course of a year?

1. How much time elapses between order placements?

1. Due to a change in production processes, Beta announces that orders can be shipped in multiples of 100 units only, thus rendering the EOQ computed in Q.1 unfeasible.
   1. Should the new (cost-minimizing) order quantity be 100 or 200 units?
   2. What is the additional cost caused by the deviation from the EOQ (as defined in Q.1)?

1. Alpha's purchasing manager has been negotiating with supplier Beta and the latter has agreed to the following terms: Lower order placement costs ($60 instead of $392) and higher unit costs ($384 instead of $380). Is this a good deal for Alpha? Why or why not?

(Note that the restrictions imposed on the order quantity in Q.4 no longer apply)