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Tyres Galore has an excess of 80,000 rubber tyre inner tubes that cost $20,000 to manufacture. Demand for the inner tubes has dropped and is not likely to pick up until next summer (after 9 months) when they could be sold for $6 each. Storage for the inner tubes costs $800 per month, and in the Queensland heat 15% of the inner tubes will deteriorate and have no value and Tyres Galore would have to spend $1 per inner tube to have the deteriorated inner tubes disposed of in landfill (unless they illegally burn them at no cost). They could have a clearance sale now and sell all of the inner tubes for $4 each, but this would also require $2,000 to advertise the sale.

Required:

(a) Based on the information provided above alone, prepare an analysis showing the relevant costs and revenues of each alternative, and based on your calculations alone, suggest which alternative Tyres Galore should chose. (12 marks)

(b) Tyres Galore reports under the Global Report Initiative (GRI) in its annual report. Explain what GRI is. Are there any non-financial considerations in the decision regarding the inner tubes? Discuss these briefly. (4 marks)