Financial management.

Thika filters Company is a distributor of air filters to retail stores. It buys its filters from severalmanufacturers. 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 filterper 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 afilter per month. (iii)What would be the optimal order quantity if ordering costs were reduced to Kshs. 10 perorder.