Study the information below and answer the questions that follow:

Normal usage or average requirement $700$ units per day

Maximum usage $800$ units per day

Minimum usage $600$ units per day

Re$-$order period $25$ to $30$ days

Time required to receive emergency supplies $4$ days

Calculate the following:

$1\mathrm{.}1\mathrm{.}1$ Ordering point $(3)$

$1\mathrm{.}1\mathrm{.}2$ Minimum limit$/$level $(3)$

$1\mathrm{.}1\mathrm{.}3$ Danger level $(3)$

$1\mathrm{.}2$ Explain the term factoring and explain why businesses factor accounts. $(5)$

$1\mathrm{.}3$ Real Ltd factors all its accounts receivables. The factoring agreement they have concluded is that a $20\%$ reserve is held and a $5\%$ commission is charged on the book value of the account. Further interest is charged at $2\%$ per month $(24\%$ per annum$)$ on advances. Real wants to factor an account of R$10000$

that falls due in $30$ days.

$1\mathrm{.}3\mathrm{.}1$ What is the advance that Real Ltd will receive? $(4)$

$1\mathrm{.}3\mathrm{.}2$ Calculate the net cost to Real Ltd$.(2)$