Assignment:
Firm A faces the following:
- 75 units per order
- 1500 orders per year
- Net cost per unit = $350
- 70% of incomplete orders backordered; 30% cancelled
- Backorder costs per backorder = $350
- Invoice deduction per backordered order = $325
Q1. What is the total lost profit or cash flow at a 80% order fill rate?
Q2. What is the total lost profit or cash flow at a 90% order fill rate?
Q3. What is the percentage decrease in lost profit or cash flow from this 10% increase in order fill rate?
Provide complete and step by step solution for the question and show calculations and use formulas.