Q1. Dave Chan operates a small desert shop (with 125 ft useable floor area) and plans to expand the current product line by selling doughnuts. His estimation of the annual demand is 5,000 doughnuts. He has contacted a local wholesaler who can supply frozen doughnuts at $5 each. The delivery lead time is 2 working days. For Dave, the holding cost of each doughnut per year is 10% of the wholesale unit price, and the ordering cost is $50 per order. There are 250 working days per year. The assumptions of Economic Order Quantity (EOQ) model are satisfied. Show the units and steps of calculation when you answer the following questions. Round the number to ONE decimal place. (Total: 20 marks) a. What is the EOQ if Dave wants to purchase doughnuts from the wholesaler? (2 marks) b. Based on the EOQ in (a), what is the total annual inventory cost (including the annual purchase cost of the doughnuts)? (2 marks) C. Based on the EOQ in (a), what is the reorder point (ROP)? (2 marks) d. Based on the EOQ in (a), what is the time between orders? (2 marks) Almost at the same time a foreign frozen doughnut supplier has approached Dave and presented him with two offers: (1) when 1,250 or more doughnuts are purchased per order, the unit price is $4.8, and (2) when 2,000 or more doughnuts are purchased per order, the unit price is $4.5. For Dave, the holding cost of each doughnut per year (i.e. 10% of the unit price) and the ordering cost per order remain unchanged. e. If Dave wants to take the first offer of this foreign doughnuts supplier, determine the EOQ, final order size, and total annual inventory cost (including the annual purchase cost of doughnuts). (4 marks) I 10e