Aroma Herbs (AH) deals in a herbal tea. The tea is imported on a six monthly basis. The management is considering to adopt a stock management system based on Economic Order Quantity (EOQ) model. In this respect, the following information has been gathered: i. Annual sale of the tea is estimated at 60,000 kg at Rs. 1,260 per kg. Sales are evenly distributed throughout the year. ii. C&F value of the tea after 10% discount is Rs. 900 per kg. Custom duty and sales tax are paid at the rates of 20% and 15% respectively. Sales tax paid at import stage is refundable in the same month. iii. Use of EOQ model would reduce the quantity per order. As a result, bulk purchase discount would be reduced from 10% to 8% iv. Cost of financing the stock is 1% per month. v. Annual storage cost is estimated at Rs. 320 per kg. vi. Administrative cost of processing an order is Rs. 90,000. Increase in number of purchase orders would reduce this cost by 10%. vii. AH maintains a buffer stock equal to fifteen days' sales. Required a) Compute EOQ. b) Determine the amount of savings (if any) which can be achieved by AH by adopting the stock management system based on EOQ model.