Problems: 1. (Submit, 8pts) A successful electrical mail order company, AJP Limited, sells toasters at a constant rate of 1,000 per month. AJP buys the toasters from XYZ ple for 10 each, and sells them for 19 each. AJP has 200,000 invested in immediate access funds at 3 percent p.a.(=per annum) Each time an order is placed, there is a fixed delivery cost 90, and an insurance is required for 10. The cost of insuring the stored goods is estimated at 2 percent of the purchase value p.a. (For shorter periods of the year, simply account for the proportional part.) a. What are the values for d, K, h? Use 1 year instead of 1 month as time unit. b. How often per year should AJP order toasters from XYZ? What should the order size be? Assume that the order lead-time is negligible. In order to save cost, AJP has decided to plan shortages, assuming a shortage cost 10 percent of the purchase value p. a. c. How often per year should AJP order toasters from XYZ? What should the order size be? (Round the quantity to the nearest integer.) d. What is the lowest level of stock? (This will be negative.) Hint: In the holding cost, you also need to account for the lost return on capital, as money is being used to purchase inventory instead of earning interest in the bank. Problems: 1. (Submit, 8pts) A successful electrical mail order company, AJP Limited, sells toasters at a constant rate of 1,000 per month. AJP buys the toasters from XYZ ple for 10 each, and sells them for 19 each. AJP has 200,000 invested in immediate access funds at 3 percent p.a.(=per annum) Each time an order is placed, there is a fixed delivery cost 90, and an insurance is required for 10. The cost of insuring the stored goods is estimated at 2 percent of the purchase value p.a. (For shorter periods of the year, simply account for the proportional part.) a. What are the values for d, K, h? Use 1 year instead of 1 month as time unit. b. How often per year should AJP order toasters from XYZ? What should the order size be? Assume that the order lead-time is negligible. In order to save cost, AJP has decided to plan shortages, assuming a shortage cost 10 percent of the purchase value p. a. c. How often per year should AJP order toasters from XYZ? What should the order size be? (Round the quantity to the nearest integer.) d. What is the lowest level of stock? (This will be negative.) Hint: In the holding cost, you also need to account for the lost return on capital, as money is being used to purchase inventory instead of earning interest in the bank