Hyclo Ltd is an underwater ship hull cleaning company. The management is

concerned about the firm's management of working capital.

a$)$ The average collection period and average payment period are $41\mathrm{.}5$ days

and $35\mathrm{.}8$ days respectively. The firm turns over its inventory $18$ times each

year $($assume $360$ days year$),$ and the firm currently has annual sales of

$$38\mathrm{.}5$ million.

$($i$)$ Calculate the firm's operating cycle and cash conversion cycle,

correct to $1$ decimal place.

$($ii$)$ Determine the amount of resources needed to support the firm's cash

conversion cycle.

b$)$ Hyclo Ltd purchases $86000$ units per year of a chemical used in the

underwater cleaning of ship hull. The cost per order is $$51,$ while the carry

cost is $$15$ per unit per year.

$($i$)$ Calculate the economic order quantity.

$($ii$)$ Using your answer in $($i$),$ calculate the ordering cost, carrying cost

and total inventory cost.

c$)$ Suppose Hyclo Ltd operates a $250$ days per year, and maintains a minimum

inventory level of $500$ units of safety stock. If the lead time to receive

orders of the component is $5$ days, calculate the reorder point.