Thika Filters Company is a Distributor of Air Filters

Answer of Thika Filters Company is a Distributor of Air Filters for $1 Only (Instant Download)

Thika Filters

Financial management

Thika filters Company is a distributor of air filters to retail stores. It buys its filters from several manufacturers. Filters are ordered in lot sizes of 1,000 and each order costs Kshs. 40 to place. Demand from the retail stores is 20,000 filters per month and carrying cost is Kshs. 0.10 a filter per month.

(i) What is optimal filter order quantity in lot sizes of 1,000
(ii) What would be the optimal order quantity if the carrying costs were cut I half to Kes.0.05 a filter per month.
(iii)What would be the optimal order quantity if ordering costs were reduced to Kshs. 10 per order.

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