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Question 2: (20 marks) Mick's Communications Company manufactures glass bers used in the communications industry. The company's materials and parts manager are currently revising the inventory ordering policy for XL-20, one of the chemicals used in the production process. The chemical is purchased in lO-kilogram canisters for $98 each. The rm uses 4 600 canisters per year. The accountant estimates that the incremental costs of ordering and receiving XL-20 are $170 per order. The annual cost of storing XL-20 is $5 per canister. Required: 1. Use the EOQ formula to determine the optimal order quantity for XL-20. (5 marks) 2. What is the total annual cost of ordering and storing XL20 at the economic order quantity? (5 marks) 3. How many orders will be placed per year? (4 marks) 4. Rally's accountant, Frank Mallard, recently attended a seminar on J IT purchasing. Afterwards, he analyzed the cost of storing XL-20, including the cost of wasted space and inefciency. He was shocked to nd 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 J IT purchasing arrangement. After some discussion and negotiation, Kaplan concluded that the cost of placing an order for XL-20 could be reduced to just $40. (a)Ca1culate the new EOQ for XL-20. (3 marks) (b)How many orders will be placed per year

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