QUESTION 2 [25 MARKS] The following data relates to Forest Side Ltd. Yr 1 $100 000 $45 000 Sales (credit) Purchases (credit) Cost of goods sold Stock - Finished goods Debtors Creditors Yr 2 $150 000 $50 000 $85 000 $35 000 $80 000 $40 000 Yr 3 $175 000 $40 000 $65 000 $20 000 $75 000 $25 000 $75 000 $35 000 $65 000 $25 000 REQUIRED (a) Calculate the length of working capital cycle year by year. [12 marks] In a particular year, the company sells 5 000 units of finished goods. The cost of holding a unit of finished goods is $25. The cost for placing an order for new inventories is estimated at $1 000. (b) Calculate the Economic Order Quantity (EOQ) of finished goods to the nearest whole number. (c) The following information is also provided: Normal Usage Minimum Usage Maximum Usage Lead Time EOQ 150/day 65/day 175/day 25 - 30 days Calculated in part (b) REQUIRED Re-Order Level [2 marks] Minimum Level [2 marks] Maximum Level [2 marks] (d) Explain what is EOQ and how it can be used by businesses? [2 marks]