South Zee Limited has credit sales of KES 45 million per year and on average settles accounts with trade payables after 60 days. One of its suppliers has offered the company an early settlement discount of 05% for payment within 30 days. Administration costs will be increased by KES500 per year if the early settlement discount is taken. South Zee Limited buys components worth KES15 million per year from this supplier. From a different supplier, South Zee Limited purchases KES24 million per year of Component K at a price of KES5 per component. Consumption of Component K can be assumed to be at a constant rate throughout the year. The company orders components at the start of each month in order to meet demand and the cost of placing each order is KES24844. The holding cost for Component K is KES106 per unit per year. The finance director of South Zee Limited is concerned that approximately 1% of credit sales turn into irrecoverable debts. In addition, she has been advised that customers of the company take an average of 65 days to settle their accounts, even though South Zee Limited requires settlement within 40 days. South Zee Limited finances working capital from an overdraft costing 4% per year. Assume there are 360 days in a year. Required: a) Evaluate whether South Zee Limited should accept the early settlement discount offered by its supplier. (4 Marks) b) Evaluate whether South Zee Limited should adopt an economic order quantity approach to ordering Component K. (6 Marks) c) Critically discuss how South Zee Limited could improve the management of its trade receivables. (5 Marks)