Use $175 as the Invoice Deduction per Order.

PLEASE SHOW CALCULATIONS

12. Assume an organization's current service level on order ll is as follows: Current order all = 80% Number of orders per year = 5,000 Percentage of unalled orders back-ordered = 70% Percentage of unalled orders cancelled = 30% Back order costs per order = $150 Lost pretax prot per cancelled order = $12,500 a. What is the lost cash flow to the seller at this 80 percent service level? b. What would be the resulting increase in cash flow if the seller improved order all to 92 percent? c. If the seller invested $2 million to produce this increased service level, would the investment be justied nancially