Problem 5 Mr. Dave Jones manages the warehouse inventory for Athleticks, a distributor of sports watchE. From his experience, Mr. Jena knows that the FR-Bjong watch has an average daily demandi of 111] units and a performance cycle of 3 days- Mr. Jones requires no buffer stock at this time. a. Assune Mr. Jones perpetually reviews inventory levels. Find the reorder point for the PFt5 joirg watch- Find the average inventory level of the Fit-5 watch. c. How might the reorder point change il.r Mr. Jones reviews inventory once each week? Find the reorder point Iunder IEE conditions. d. Find the average imrentorylevel ofthe Flt-5 watch under this periocic review. Problem- Ms. Sara Hitter is the distribution manager for the Fiesta Soft Drink Company. She is con'dering full automation of the plant's warehouse. At presentI the warehouse utiEzes a mechanized system of materials handling. The current system employs ED laborers at an average wage rate of Slmutour. Laborers worlv: an averageofzltltl hours per year.'t'he mechanization cost: 5131:\": annualiyto ma'mEIin. The equipment was purchased two years ago with uniform payments of $25,131:: made annuay. In year El the mechaniEII equipment wil be replaced by new machinery with xed annuai case of Said-Ella. in addition, itwil cost Fiesta 512,1]-u per yearto maintain HIE new equipment with the same 1D laborers. The automated equipment would cost $1.2 milion upfront tor inplementation- Dnly eight laborers and an automation specialist would be required to maintain opelaons in the new system. The laborers would earn Elhour over alooo hours each year. The automation specialist would earn a salary of $EEJIIID per year, increasing 2 percent annually after the list year. Much of the old mechanized eqto'proent could be sold immediately for a total of 5125,ooo. Maintenance ofthe automated system is estinated at 5503:]: each year with 'dtis cost growing by 3 percent mnually after the rst year. The automated system is expected to serve Fiesta for 1.5 years. a. Examine the cash ow under each system- what is the payback period for automation? b. What advantages aside from long-term cost savings might in automated warehouse have over more labor-intensive systems