A restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00 per bottle and is served only in whole bottles because its taste quickly deteriorates. The restaurant figures that it costs $10.00 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The restaurant operates 50 weeks per year. The restaurant would like to use an inventory system that minimizes inventory cost.
1. What is the most economic order size?
400
404
408
412
None of the above
2. Approximately, how many orders should be placed in a year
10
12
15
20
3. What is the total ordering cost of this policy
122
132
100
152