PROBLEM QUESTIONS (10 MARKS EACH, TOTAL 20) PROBLEM 1: Assume Custom Doggy Tag company's current service level on order fill is as follows: ITEM FIGURES Investment $2,250,000 Targeted service level 86% Cash flow formula = (number of incomplete Current order fill 75% orders backordered x backorder cost per Number of orders per year 6000 order) + (number of incomplete orders cancelled x lost pretax profit per order) + Percent of unfilled orders backordered 65% (number of incomplete back-ordered x invoice Percent of unfilled orders cancelled 35% deduction per order) Backordered costs per order $170 Lost pre-tax profit per cancelled order $10,000 Show your work a. What is the lost cash flow to the seller at this 75 percent service level? (3 MARKS) b. What would be the resulting increase in cash flow if the seller improved order fill to 86 percent? (3 MARKS) c. If the seller invested $2,250,000 to produce this increased service level, what is the Return on Investment, and wo investment be justified financially? (4 MARKS)