The 'Try to Have Just One' (THJO) sunflower seed company roasts and seasons sunflower seeds (in shell). For their production, they require a specific type of oil that they source from a local supplier; the lead time on orders is 3 days. The oil comes in a box that is lined with plastic, with each box of oil costing THJO S72. Demand averages 100 boxes per day, with a standard deviation of 26 (assume that they run production 365 days/year). Ordering is done by a Procurement Specialist working at THJO and requires checking with the Production Department to see if there are any plans that might cause a sudden change in demand, creating a purchase order (PO), transmitting the purchase order by email and following up with the supplier, and then processing the product receipt and invoice when the product arrives a recent study by the Procurement department estimates a total administrative cost of $30 per PO (independent of order quantity). The Accounting and Finance Department has requested that a rate of 19% be used when determining holding costs of inventory (this includes cost of capital, insurance, variable storage, and other costs that vary with the amount of inventory on hand). (For the sake of this analysis, ignore seasonality in demand, and any quantity discounts or transportation costs.) Currently, they order Q = 500 when inventory reaches R = 350 boxes. 1. (5.5 points) Diagram their current ordering policy in a \"sawtooth\" diagram that clearly labels the order quantity, reorder point, cycle stock, average cycle stock, safety stock and lead time. Start time zero with 450 units on hand (so your first order will be placed at day 1). *Hint Cycle stock is a changing variable while average cycle stock is a constant. They are two different concepts. * NOTE Equations and calculations are tangible ways to implement a concept, but note that the concept is important as well be sure to understand what you are doing and why, and notjust how to make the calculation when completing this assignment. Inventory 500 450 400 350 BOO 250 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Time (Days)2. (4.5 points) Find the annual ordering and holding costs associated with the current ordering policy IQ=500L Then determine the optimal order quantity to minimize total annual ordering plus holding costs. (Note it will be necessary to use annual demand to do this.) Current Order Quantity EOQ (Optimal Order Quantity) Order Quantity Annual Ordering Costs F Annual Holding Costs (no need to consider holding costs of safety stock, just include cycle stockrelated cost ) Total Costs