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The Pacific Lumber Company and Mill has demand for and processes 1 0 , 0 0 0 logs annually ( this is the amount they

The Pacific Lumber Company and Mill has demand for and processes 10,000 logs annually (this is the amount they sell to their customers), operating 250 days per year. Immediately upon receiving an order, the logging companys supplier begins delivery to the lumber mill, at a rate of 60 logs per day until the whole order is received. The lumber mill has determined that the ordering cost is $1,600 per order and the cost of carrying logs in inventory before they are processed is $15 per log on an annual basis. Determine the following:
What is the total inventory cost associated with the optimal order quantity?

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