Answer to Question #350422 in Management for gulnigor

Question

6. The J. Sports Inc. purchases tennis balls at $120 per dozen from its suppliers. The John Sports will sell 40000 dozens of tennis balls evenly throughout the year. The total cost to handle a purchase order is $25. The insurance, property tax and rent for each dozen tennis balls in the average inventory is $1.5. The company wants a 12% return on average inventory investment. Required:  Compute the economic order quantity.  Compute the total annual inventory expenses to sell 40000 dozens of tennis balls if orders are placed according to economic order quantity computed in part 1