b) The following data gives the number of defectives in 5 independent samples from a production process. The samples are of varying size. Draw appropriate chart and comment on the process. Sample number Sample size Number of defectives 2000 400 1000 150 1000 600 400 [10 Marks] A company with a cost of capital of 14% is trying to determine the optimal replacement cycle forthe Ovens used by its hospitality department. The following information is relevant to the decision. The cost of each Ovens is Sh.240,000. Maintenance costs are payable at the end of each full year of ownership, but not in the year of replacement e.g if the Ovens is owned for two years, then the maintenance cost is payable at the end of year 1. Interval between Trade-in value replacement years Sh. Maintenance cost Sh. 120,000 Zero 80000 75,000 (Payable at end of Year 1) 30000 150,000 (Payable at end of Year 2) Required: Ignoring taxation, calculate the equivalent annual cost of the three different replacement cycles and recommend which should be adopted. What other factors should the company take into account when determining the optimal cycle