Please explain and answer in detail. Thank you!

6. Excess as well as shortage of inventory is not desirable for a business firm. Explain. Assuming monthly sales level of 3,000 units, estimate the gross working capital requirements of XYZ Ltd., if the desired cash balance is 5% of gross working capital requirement and work-in- progress is 25% complete with respect to manufacturing expenses. The expected cost of goods is as follows: Rs. (per unit) Raw material 120 Manufacturing expenses (including depreciation Rs.5 per unit) 35 Selling, administration and financial expenses 15 Selling price 220 The duration at various stages of operating cycle is expected to be as follows: Raw material stage 2 months Work-in-progress stage 1 month Finished goods stage 1/2 month 1 month Debtors stage *********