Given the following facts for the Histep Company:

Differential costs per order	$20
Annual requirement	1,000 units
Inventory carrying costs	$1.00 per unit per year
Purchase cost per unit	$10

REQUIRED:

a.	Complete the following chart:

Average Annual Orders

Order Size

No. of Units in Inventory

Inventory Carrying Costs

Order Costs

Total Costs

2

4

5

8

10

b.	Using trial and error, which order size should be used?

c.	Using the economic order quantity formula, what is the optimal number of units in each order?