Phillips Limited manufactures two products: A and B. As shown in Exhibit A, each product goes through different operations before it is shipped to customers as a finished product. Product A is processed on machines 1,2,4, and 3 (in that sequence) to be a completed product, while product B is processed on machines 5,6 and 4 before it turns into a finished product. Cycle time for each product on each of the machines is given. Note that machine 4 operation is common to both the products. However, it takes an operator 5 minutes to finish the work on product A, while for B it takes 8 minutes. Currently, the plant operates for 450 minutes per day. Thus, every day the time avallable for production at each of the machines is 450 minutes. Also, the company produces 40 units of A and 30 units of B each day. This schedule is heing followed foc the last several years. The plant operates 26 days each month. The details for products A and B are as follows: The company invested $2.5 million in buildings, machinery, and inventories for the two products. The yearly operating expenses include payroll, interest on loans, utilities and average about $1.3 million. When solving the case, answer the fothowing questions. Make swre to show ah your work. Otherwise, no credit will be given for correct answers. Question \#1: Calculate the four measures of performance of TOC: annualized net profit, return on investment, productivity and inventory turns for the current operation. (5 points) Question \#2: What changes can be made in the production levels of A and B? Calculate the four measures of performance of TOC on an annualized basis. (10 points) Question \#3: At an additional cost of $500,000 the company can replace machine 4. The new machine will reduce cycle times for products A and B to 3 and 6 minutes, respectively. However, the interest on the loan will be 10% per annum. Should the company replace machine 4? (10 points) Question \#4: Since the new machine 4 is installed, the Marketing Department proposes that for $250,000 in sales promotion, it can increase the demand for product A from 75 units to 80 units per day. Is the proposal worth considering? Justify your answer. (5 points) Exhibit A