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Delight Engineering Solutions (DES) (a hypothetical company) is manufacturing product CAF-5 from use of single raw material CAI-100. The two major departments operational in Delight Engineering Solution are purchase and production. DES is facing high competition due to large number of competitors in market. Demand of CAF-5 is fluctuating, therefore high storage cost is prime cause of low financial performance. DES Company decided to move from traditional system to JIT system. From purchase and store following data is collected. Annual consumption is of 1,800 units of CAI-100. List Price of each unit of CAI-100 is 4,000. The cost of placing order is 2,000 and cost of carrying one unit of CAI-100 for a year is 2%. Company presently use EOQ model of ordering. Purchase Manager further estimated that, if JIT system of inventory is implemented, ordering cost will increase by 50% from current level, whereas carrying cost can be avoided up-to 90%. But there is prospective order of 5 units of CAF-5 which cant be served, due to nonavailability of stock and failure of delivery by supplier. Contribution from each unit of CAF-5 is 1,200. Stock insurance cost will reduce by 400 on annual basis. There will also be reduction in working capital requirement, which will result in interest saving of 500 on annual basis. Further, Production and Engineering department supported by marketing department provide details that presently average production of CAF-5 is 150 units of per month, although for next 4 months expected demand will be 120, 160, 140, 180 units. Maximum capacity from manhours perspective is 150 units. 20 man-hours required for producing each unit and labour rate per hour is 3. Casual labour is not available in market. Overtime rate will be 200%. Average monthly cost of storage of each item of CAF-5 is 65. Required (i) EXPLAIN the JIT purchasing and JIT production and the effect of its introduction. (ii) COMPUTE cost savings if it moves to JIT Purchasing. (iii) COMPUTE cost savings if it moves to JIT Production.