Reference no: EM132580892

The warehousing and security costs have skyrocketed since the inception of the dry port at Naivasha. Mr. Litali is keen on keeping inventory costs low.

The monthly demand is estimated at 4,550 chipsets, while the ordering cost is pegged at Kshs 150,000. Litali is adamant about the new warehousing cost of Kshs 300 per unit.

Question 1: Advise Mr. Litali on how many orders he should make in a year.

Mr. Litali in a recent phone call with his supplier was made aware of quantity discounts. He has no idea of how this will impact his inventory costs. Educate him on the relevance. (Include the necessary computational formulae)