Question 1 The Delta Lawn Supply Company is reviewing its inventory policy regarding lawn seeds. The following relationships and conditions exist: i. Orders must be placed in multiples of $100 bags. ii. Demand requirements for the year are 16 200 bags. iii. Purchase price per bag is $5.00. iv. Carrying cost is 20% of inventory value. v. Fixed costs per order is $25. vi. Desired safety stock is 300 units (this amount is on hand initially) vii. Five days are required for delivery. viii. Assume 360 days per year. Delta projects that cash outlays of $1.5 million will occur uniformly throughout the year. The company plans to meet cash requirements by periodically selling marketable securities from its portfolio. The companys marketable securities are invested to earn 9% and the cost per transaction of converting securities to cash is $18.00. A. Calculate the EOQ. (4 marks) B. How many orders should Delta place each year? (2 marks) C. Compute the order point. (4 marks) D. Compute the average inventory level. (2 marks) E. Using the Baumol model, what is the optimal transaction size for transfer from marketable securities to cash? (4 marks) F. What will be Deltas cash balance? (2 marks) G. How many transfers per year will be required? (2 marks)