Millbridge Hospital buys 10,000 boxes of latex gloves every year. Each box costs the hospital $7 dollars. The cost to place an order for the gloves-which covers the employee staff time, shipping costs

The economic order quantity (EOQ) can be calculated as follows: EOQ = ?((2DS)/(H)) Where D is the annual demand (10,000 boxes), S is the cost per order ($50), and H is the holding cost per unit per year ($0.50). EOQ = ?((2 x 10,000 x 50)/0.50) = 2,000 Therefore, Millbridge Hospital should order 2,000 boxes at a time. The number of orders per year can be calculated as follows: Orders per year = D/Q Where Q is the EOQ. Orders per year = 10,000/2,000 = 5 So, there should be 5 orders per year. The total ordering cost at the EOQ is: Total ordering cost = (D/Q) x S = 5 x $50 = $250 The total carrying cost at the EOQ is: Total carrying cost = (Q/2) x H = 1,000 x $0.50 = $500 Therefore, the total ordering and carrying costs at the EOQ are $750. If all boxes were simply ordered at the start of the year, the total cost would be: Total cost = D x (S + H) = 10,000 x ($50 + $0.50) = $505,000 This is much higher than the total cost at the EOQ, which is only $750. Ordering at the EOQ helps to minimize inventory costs and reduce the total cost of carrying inventory throughout the year.