QUESTION $2(20$ MARKS$)$

A$.$ Dutch lady is determining the order for bricks. Annual sales for bricks are $100,000$ units. The cost of carrying bricks is $$5\mathrm{.}50$ per unit. It costs $$60$ to prepare and receive an order. Since the inventory planning period is one year, the firm needs to maintain a safety stock of $2,500$ units to ensure the production can be run smoothly.

REQUIRED:

I. Compute the optimal Economic Order Quantity $($EOQ$).$

$(2$ marks$)$

II$.$ Compute the total company's total inventory cost of the year.

$(4$ marks$)$