Economic Order Quantity. Micro-Encapsulator Corp. (MEC) expects to sell 7,200 miniature home encapsulators this year. The cost of placing an order from its supplier is $250. Each unit costs $50 and carrying costs are 20% of the purchase price. (Please show workings).
a. What is the economic order quantity?
b. What are the total costs – order costs plus carrying costs – of inventory over the course of the year? (Please show workings).