The owner of an ice cream store specializing in a single flavor anticipates the daily demand to be 50 gallons during the peak summer months. The ordering cost is $16 per order. His estimate of the holding cost is $0.25 per gallon per day.

a) What is the economic order quantity?

b) If his freezer space has a maximum capacity of 50 gallons, what should be his ordering quantity?

c) What is his daily dollar loss due to insufficient freezer space? Would you advise him to rent additional freezer space of similar capacity at $1 a day rental charges?