(Chapter 12: Economic Order Quantity) Taylor Supply is a wholesaler of office supplies and equipment. Taylor purchases cartons of staples from Barker Manufacturing at $7 per carton (of staples). Taylor incurs a fixed charge of $90 per order to cover order equipment and clerical costs. Taylor has projected sales to be 220,000 boxes next year. Taylor's accounting department has determined the holding cost percentage as 28% annually. Assume Taylor sets Q = 6,000 cartons of staples.

Q1

What is Taylor's annual holding cost (to the nearest dollar)?

Group of answer choices

$5,880

$52,000

$42,000

$11,760

Q2

What order quantity (to the nearest carton) will result in Taylor's annual order cost equaling its annual inventory carrying cost?

Group of answer choices

4,495 units

23,785 units

404 units

350 units

5,190 units

Q3

Assume Taylor sets Q = 6000 cartons. Which of the following statements is true?

Group of answer choices

Annual order cost and annual inventory holding cost will be lower than optimal.

Annual order cost will be lower and annual inventory holding cost will be higher than optimal.

Annual order cost and annual inventory holding cost will be higher than optimal.

Annual order cost will be lower than optimal and annual inventory holding cost will be equal to the optimal.