Mungo Pet Supplies Makes Cat Trees for Several Pet Store

Multiple Choice

Mungo Pet Supplies makes cat trees for several pet store chains. They order rolls of carpet (used to cover the trees) from a supplier. Mungo's management has decided to use an EOQ model. The annual demand for carpet is estimated to be 1,000 rolls. The purchase price per roll is $20 and estimated inventory carrying cost rate is 25%. The cost to place an order from the supplier is $30. What is the annual ordering cost for the optimal order quantity?

A) $109.54
B) $600
C) $547.72
D) $273.86