(Identification of carrying, ordering costs) Wilson Industries has been evaluating its policies with respect to control of costs of metal tubing, one of the firm’s major component materials. The firm’s controller has gathered the following financial data, which may be pertinent to controlling costs associated with the metal tubing:

a. Which of the ordering costs would Wilson’s controller take into account in using the EOQ model? Explain.

b. Which of the carrying costs would Wilson’s controller take into account in using the EOQ model? Explain.

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ORDERING COSTS Annual salary of purchasing department manager Depreciation of equipment in purchasing department Cost per order for purchasing department supplies Typical phone expense per order placed Monthly expense for heat and light in purchasing department $41,500 $22,300 $.30 $3.20 $400