Steady monthly demand for the electrical power supply wa $250$ units. The selling price of an electrical power supply unit was R$80000$ and a mark$-$up of $60\%$ on cost was used. All the sales are on credit and the collection period is $90$ days. Collection costs of approximately R$100$ per unit sold were incurred. The annual holdino cost of an electrical power supply unit was $0\mathrm{.}24\%$ of the unit cost of the item. The cost of placing an order for electrical power supoly units was. R$50.$ The cost of capital was $15\%$

After two months of employment Mariam Dube made the following proposals to the directors:

The company should take advantage of a $5\%$ discount from the manufacturer by ordering $100$ electrical power supply units each time instead of ordering the economic order quantity.

A discount of $4\mathrm{.}5\%$ should be granted to those customers who seftle their accounts within $10$ days. She expects that this is likely to apply to $30\%$ of the sales.

QUESTION $1$

REQUIRED

$[30$ MARKS$]$

$1\mathrm{.}1$ Critically discuss the working capital policy of the company before Mariam Dube was employed.

$1\mathrm{.}2.$ Calculate the annual carrying costs based on the EOQ. $($Ignore the opportunity cost.$)$

$1\mathrm{.}3.$ Calculate the annual profit to the company, without considering Mariam Dube's proposals. Ignore the holding and ordering costs.

$1\mathrm{.}4.$ How much will the net annual saving from purchasing be if the company takes advantage of the $5\%$ manufacturer's discount, as proposed by Mariam Dube?