(For the following information applies to the next three problems.)

Assume that Palmer Executive Pens uses 1,440,000 gallons of ink each year. Further, assume that Palmer can order the ink at a cost of $2 per gallon plus fixed ordering costs of $100 per order. The firms carrying cost is 20 percent of the inventory value, at cost.

16. What is the firms EOQ?

Annual Requirement = 1,440,000 (A)

Cost per unit = 2 (C)

Ordering cost = 100 per order (O)

Inventory carrying cost = 20% of inventory value (I)

Economic order quantity = 2 x A x O/ I x C^0.5 = 2 x 1,440,000 x 100/ 0.2 x 2^0.5 = 26,832.8157 gallons

17. What is Palmers minimum costs of ordering and holding inventory?

Minimum orders = 1,440,000/26,832.8157 = 53.6656 orders

Minumum cost of ordering = Minimum orders x 100 = 53.6656

100 x 53.66.56 = 5,366.56

Holding inventory cost = Inventory x Inventory carrying cost

EOQ/2 x 20% x 2 = 0.20 x 2 x 26,832.8157 =$10,733.13 holding inventory cost

18. Now, suppose the manufacturer offers a discount of 0.5 percent for orders of a least 40,000 gallons. Should Palmer increase its ordering quantity to take the discount? What will be net saving or loss from taking the discount?

*I just need 18 answered.. thank you!