Murphy’s is famous for their coffee blend. The company buys and roasts the beans and then packs the coffee in foil bags. It buys the beans periodically in quantities of 120,000 pounds and assumes this to be the optimal order quantity.

This year it has been paying $2.40 per pound on a fairly constant basis.

The company ships 1,200,000 1-pound bags of its blended coffee per year to its distributors. This is equivalent to shipping 24,000 1-pound foil bags in each of 50 weeks of the year. This can be considered to be constant and continuous demand over time. What carrying cost in percent per year is implied (or imputed) by this policy if an order costs $100 on the average? Discuss the results.