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Hartley Incorporated buys plastic resin by the ton and then packages and distributes it in smaller amounts to industrial users. The resin typically costs $50 per ton, and Hartley uses 80,000 tons each year. Placing an order for more resin costs $500 in allocated labor cost for purchasing personnel. Holding costs for the resin are estimated at 1% of the product value each month. Hartley operates 365 days a year.
How much resin should Hartley order each time?
What will be the average inventory and annual holding cost?
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