QUESTION 5 (25 Marks) (a) 1) What are the different inventory types? How do we manage of each? 2) What are some of the factors that determine the length of the credit period? (8 marks) (b) The Hilda Corporation manufactures only one product: planks. The single raw material used in making planks is the dint. For each plank manufactured, 12 dints are required. Please assume that the company manufactures 150,000 planks per year, that demand for planks is perfectly steady throughout the year, that it costs $200 each time dints are ordered, and that carrying costs are $8 per dint per year. REQUIRED 1) Determine the economic order quantity of dints. (3 marks) 2) What are the total inventory costs for Hilda? (2 Marks) 3) How many times per year would inventory be ordered? (2 marks) (c) The firm is considering changing its credit period from "net 30" to "net 60". The firm is currently producing a single product with variable costs of $40 and a selling price of $50. Additional annual credit sales of $500,000 from new customers are forecasted, in addition to the current $4 million in annual credit sales. The before tax opportunity cost for each dollar of funds "tied-up" in additional receivables is 20%. REQUIRED 1) Calculate the expected benefits and costs of the proposed credit policy. (8 malas) 2) Should you extend credit? Assume that this is a one-time sale and that the customer will not buy if credit is not extended. (2 marks)