Mungo Pet Supplies makes cat trees for several pet store chains. They order rolls of carpet (used to cover the trees) from a supplier. Mungo’s management has decided to use an EOQ model. The annual demand for carpet is estimated to be 1,000 rolls. The purchase price per roll is $20 and estimated inventory carrying cost rate is 25%. The cost to place an order from the supplier is $30. What is the total annual cost for the optimal order quantity?
a. $109.54
b. $600
c. $547.72
d. $273.86
c. $547.72
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