Simply Steak recently expanded its menu at their premier Miami location by offering the new Steak Valetta. The new addition requires a special spice rub made by mixing rosemary, salt, sage, lemon, fennel, garlic, marjoram and a secret ingredient. Simply Steak uses 147.69oz of the spice rub during a typical week. The rub is purchased from SpiceSource in Evanston, IL. SpiceSource sells 1.5oz spice shaker jars for $3.60 or 10lb re-sealable spice bags for $288 each. [Note that 1oz = 0.0625lb]. Based on the storage complexities involved in keeping the spice rub fresh, the holding cost per ounce for one year has been determined to be 24% of the cost price. The cost of ordering is quite low, at $2.88 per order, and safety stock is equal to 2 days of demand. Simply Steak is open 6 days a week throughout the year.

a) Ignoring the cost of transportation from Evanston, what is the total annual cost of Simply Steaks inventory policy? [20 points]

b) As an incentive to a long-time customer, SpiceSource has offered to bear half the cost of transporting the spice rub to Simply Steak for one year, IF Simply Steak agrees to order no less than 30lb of the spice rub at a time. The dispatch department just obtained the following shipping costs from a nearby FedEx facility.

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Clearly show why Simply Steak should OR should not take the offer from SpiceSource. [20 points]