State Universi Warren recently receive a letter from TLC that showed the unit price of the stereo system would be $225 because of the inflation and the shortage of semiconductors. Warren decided to negotiate with TLC. Eventually, the sales rep of TLC has made the following offer to Warren: If Warren orders more than 200 units at a time, the cost per unit is $215.00. If the order is between 100 and 199 units at a time, the cost per unit is $225.00. However If the order is from 1 to 99 units at a time, the cost per unit is $240.00 Warren revised his assumptions and estimates monthly demand will be declined to be 425 units of stereo systems. Holding cost will increase to 8 percent of unit price. The cost to place an order will be higher to be $60.00. The information is summarized as below: (This is from 'Inventory' tab of the final exam worksheet.) Quantity purchased Unit price 1 - 99 units $240 100 - 199 units $225 200 or more units $215 Monthly demand Ordering cost Holding cost 425 units $60 per order 8% per unit cost Warren is interested in the most cost-effective ordering policy. What is the optimal (most cost-effective) order quantity if Warren uses the quantity discount model? (If necessary, round to the nearest integer.)
