B$.$ Economic Order Quantity $($EOQ$)$ Model: Ardmore Farm and Seed

Ardmore Farm and Seed has an inventory dilemma. It has been selling a brand of very popular insect spray for the past year. It has never really analyzed the costs incurred from ordering and carrying the inventory and currently faces a large stock of the insecticide in the warehouse. Ardmore estimates that it costs $$25$ to place an order and $$0\mathrm{.}25$ per gallon to hold the spray in inventory. The annual requirements total $80,000$ gallons for a $360-$day year.

Assuming that $10,000$ gallons are ordered each time an order is placed, estimate the annual inventory costs.

Calculate the Economic Order Quantity $($EOQ$)$ for this insect spray.

$2$