Annual demand for an item is 35,000 units. The holding cost rate is 15% of the item cost. Ordering costs are $25 per order. Quantity discounts are available according to the schedule below:
Quantity Price per Unit ($)
1-99 80.00
100-299 79.50
300-399 79.25
400+ 79.00
Requried:
a. What is the optimal order quantity? If necessary, round to the nearest whole number.
b. From the previous problem, what is the total annual cost of your policy?
