Problem:
The I-75 Carpet Discount store has an annual demand of 10,000 yards of Super Shag carpet. The annual carrying cost for a yard of this carpet is $0.75, and the ordering cost is $150. The carpet manufacturer normally charges the store $8 per yard for the carpet; however, the manufacturer has offered a discount price of $6.50 per yard if the store will order 5000 yards. How much should the store order, and what will be the total amount inventory cost for the order quantity?