Kenyatta university health unit buys a certain antibiotic from a large supplier. The drug can

be bought at the following prices:

Quantity

Price per unit (Sh.)

1 - 4,999

5,000 - 9,999

Over 10,000 units

2.75

2.60

2.50

The demand for the drug in the health unit is 50,000 units a year. There is an ordering

cost of Sh. 50 per order and a holding cost of 20% of the cost of the item per unit per

year. Find the optimal purchasing policy for the hospital