7. The Domino Taxi company uses 200,000 gallons of gasoline per year at a consistent rate. It costs $40 to have the truck come to the garage and deliver gasoline and to process the orders, invoices, and checks associated with each delivery. Evaporation losses and other storage costs are $0.015 per gallon per month.

a. How much gasoline should the company purchase with each order?

b. What is the penalty if the company’s tank will hold only 8,000 gallons, so that the company can purchase only 7,500 gallons at each order?

c. Should the company spend $3,000 to have an additional storage tank installed?