1. With the rapid expansion of AKE business, Adam is contemplating on the idea of opening one more branch at strategic location in a new housing area. The options available are either to rent the premise or to buy them. For the rental option, it will cost AKE about RM3,500 a month for a single unit. On the other hand, the price of a single shop lot is RM450,000. The deposit required is RM50,000 for a unit while the balance will be financed through bank loan for 20 years with an estimated monthly loan instalment of RM2,800. Critically assess these two options and explain to Adam how each of the options will be impacting the operational costs of AKE.

Adam is undecided whether to buy a higher volume of cleaning inventories for a better price from the suppliers or keep its existing practice of buying as-when-needed basis. The former will require additional space to store the inventories while the latter is sufficient with the existing facility. Analyze and explain to Adam what benefits and shortcomings of these two options.