Pure Sound Ltd.makes musical instruments.One of their products is an acoustic guitar that has an annual demand of 4,000 units.The setup cost for each production batch is $1,500; it costs $12 to carry a guitar in inventory for one year.Required:
1.What is the total annual relevant batch set up and carrying cost if the company uses the economic order quantity? Assume that setup costs are the same as ordering costs.2.The company is switching to a just-in-time system.The average order size is 200 guitars.What is the total annual relevant batch set up and carrying cost?
3.Compare the Enterprise Resource Planning EOQ model with the JIT model.What are the advantages and disadvantages of each?

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The Answer of Pure Sound Ltd.makes musical instruments.One of their products is an acoustic guitar that has an annual demand of 4,000 units.The setup cost for each production batch is $1,500; it costs $12 to carry a guitar in inventory for one year.Required:
1.What is the total annual relevant batch set up and carrying cost if the company uses the economic order quantity? Assume that setup costs are the same as ordering costs.2.The company is switching to a just-in-time system.The average order size is 200 guitars.What is the total annual relevant batch set up and carrying cost?
3.Compare the Enterprise Resource Planning EOQ model with the JIT model.What are the advantages and disadvantages of each?