working capital

(a) ZPS Co places monthly orders with a supplier for 10,000 components that are used in its manufacturing processes. Annual demand is 120,000 components. The current terms are payment in full within 90 days which ZPS Co meets, and the cost per component is $7.50.
The cost of ordering is $200 per order, while the cost of holding components in inventory is $1.00 per component per year.
The supplier has offered either a discount of 0.5% for payment in full within 30 days, or a discount of 3.6% on orders of 30,000 or more components. If the bulk purchase discount is taken, the cost of holding components in inventory would increase to $2.20 per component per year due to the need for a larger storage facility.
Assume that there are 365 days in the year and that ZPS Co can borrow short-term at 4.5% per year.
Required:
(i) Discuss the factors that influence the formulation of working capital policy.

(li) Calculate and comment if ZPS Co will benefit financially by accepting the offer of:
????the early settlement discount;
????the bulk purchase discount.

(b) Managers and owners of businesses may not have the same objectives.
Required:
(i) Explain this statement, illustrating your answer with examples of possible conflicts of
interest.
(ii) Discuss the argument that maximization of shareholder wealth should be the only
objective of a company.