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(TOTAL: 30 Marks) QUESTION FOUR Green Lantern, a pub & grill estimates that it will sell 10 000 drinks per year which it will purchase

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(TOTAL: 30 Marks) QUESTION FOUR Green Lantern, a pub & grill estimates that it will sell 10 000 drinks per year which it will purchase from a distributor in Luanshya. A beer costs K18.00 to purchase and K2.00 in transport charges each. The company borrows funds at 9 % interest rate to finance inventories. Green Lantern's purchasing agent has calculated that it costs K50.00 to place an order for drinks and that the holding cost per annum is K3.00 for each beer. (5 REQUIRED: A. Calculate the number of drinks that Green Lantern should request in each order. (Due to the nature of the question, you are requested NOT to round off your answer at this point) MARKS) B. Calculate the annual number of orders. (Due to the nature of the question, you are requested NOT to round off your answer at this point) (4 MARKS) C. Calculate the annual ordering cost using the order size in (A) above. (You may round off all answers to the nearest two decimal places from this point forward) (4 MARKS) D. Calculate the annual carrying cost using the order size in (A) above. (4 MARKS) E. Calculate the Total Cost using the order size in (A) above. (4 MARKS) F. Determine the order-size decision Green Lantern should make if the Luanshya distributor offers a 5% discount off the purchase cost excluding the delivery price for minimum orders of 1 824 drinks. (9 MARKS) (Total: 30 Marks)

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