Part 1: Order Fill Rate Firm XA is facing the following situation with their orders: 1600 orders per year 120 units per order Net cost per unit = $350 When they do not have all the products required, the orders are either backordered or cancelled: 75% of incomplete orders are backordered; 25% are cancelled. Costs per (backed) order = $300 When orders are backordered, customers receive a discount. Invoice deduction per backordered order = $250

Answer the following questions for Firm XA (Show your calculations for all questions): 1. What is the total amount of lost profit/cash flow at a 90% order fill rate? (Points: 20) 2. What is the total amount of lost profit/cash flow at a 95% order fill rate? (Points: 20) 3. What is the money difference in lost profit/cash flow? Are they increasing or decreasing the lost profit/cash flow from the 5% increase in order fill rate? Explain (Points: 10)