Problem Set 1 is Problems 1 and 2 (Mike McNeely) In the problem Appendix in the eBook which starts on page 170. 1. Describe your strategy to solve these problems. 2. Answer the questions in BOTH problems 1 and 2. 3. Create a table or tables to help show you work in problem 1 4. Show your work in a step by step method and fill in your table. 1. Mike McNeely, logistics manager for the Illumination Light Company, has considered replacing the firm's manual customer order management system with electronic ordering, a web-based application. He estimates the current system, including labor, costs $2.75 /order for transmission and processing when annual order volume is under 30,000. Should the order volume equal or exceed 30,000 in any given year, Mr. McNeely will have to hire an additional customer service representative to assist order reception in the manual process. This would raise the variable cost to $3.25 /order. He has also estimated the rate of errors in order placement and transfer to be 12/1,000 orders. A web-based application would cost $125,000 upfront to implement and variable costs are determined to be \$.35/order regardless of volume. A web-based application could acquire and maintain order information with an error rate of 3/1,000 orders. A web-based specialist would be required to maintain the system at all times as well. Her salary is $40,000 in the first year and increases 3 percent each year thereafter. Order errors cost $7.00 per occurrence on average to correct in the manual system. Web-based errors cost $9.00 on average to correct since the specialist inspects the system for flaws on most occasions. a. If the firm expects order volume over the next five years to be 22,000,25,000,27,000,32,000 and 38,000 annually, would a web-based system pay for itself within the first five years? b. What effects aside from cost might Mr. McNeely consider when implementing a web-based solution? 2. Mr. McNeely currently batches orders for processing under the manual order management system. The orders are batched for daily processing. If Mr. McNeely opts to implement a web-based solution, might this affect his current means of order processing? If so, how