Telco Corporation is reporting the following data:

Current order fill rate $=80\%$

Number of orders per year $=55,000$

Percentage of unfilled orders backordered $=70\%$

Percentage of unfilled orders cancelled $=27\%$

Percentage of lost customers $=3\%$

Backorder costs per order $=$$$65$

Lost pretax profit per cancelled order $=$$$1,650$

Estimated cost of lost customer $=$$$15,000$

Task Part B

Answer the following questions:

What is the cost of a stockout $($i$.$e$.,$ lost cash flow$)$ to the seller at the $80$

percent order fill service level? Explain how you determined the cost, including

the total cost of backorders, total cost of lost sales, and total cost of lost

customers.

What is the cost of a stockout $($i$.$e$.,$ lost cash flow$)$ to the seller at the $90$

percent order fill service level? Explain how you determined the cost, including

the total cost of backorders, total cost of lost sales, and total cost of lost

customers.

If the seller invested $$5$ million to produce this increased service level $($from

$80\%$ to $90),$ would the investment be justified financially? In order words,

would the company be losing less money at the $90\%$ service level than the $5$

million dollar investment?