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Question
Assume that annual demand for a part is 40,000 units, the ordering cost is $5 per order and the annual holding cost of carrying inventory in stock is 10% of the cost of the unit. A quantity discount will reduce the unit price from $5.00 for an order placed between 0 to 2,499 units to $4.95 for an order of the size of 2,500 units or more. Using a price-break inventory model, which of the following is the optimal order quantity?
A. 894 units
B. 899 units
C. 2,499 units
D. 2,500 units
E. 2,709.4 units
Answer
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Related questions
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