QUESTION $6$

The John Sports Inc. purchases tennis balls at R$20$ per dozen from its suppliers. The John Sports will sell $34,300$

dozens of tennis balls evenly throughout the year. The total cost to handle a purchase order is R$10.$ The insurance,

property tax and rent for each dozen tennis balls in the average inventory is $R0\mathrm{.}40.$ The company wants a $5\%$ return

on average inventory investment.

Required:

$6\mathrm{.}1$ Compute the economic order quantity for Johns Sports Inc.

$6\mathrm{.}2$ Compute the total annual inventory expenses to sell $34,300$ dozens of tennis balls if orders are placed according

to economic order quantity computed in $6\mathrm{.}1.$