Viking Manufacturing, Inc. currently begins each sales cycle with 12,500 vacuum cleaners in stock. This stock is depleted at the end of each sales cycle and then reordered. The firm currently places 42 orders per year. The carrying cost per vacuum cleaner is $24.69 per year and the fixed order cost is $5,000. Assuming there is no shortage cost for this firm.
What is the total cost of current inventory policy?
Calculate the economic order quantity.