Ji-Hun Li sells CDs that contain 25 software packages that perform a variety of financial functions, including net present value, internal rate of return, and other financial programs typically used by business students majoring in finance. Depending on the quantity ordered, Ji-Hun offers the following price discounts. The annual demand is 2,000 units on average, and the setup cost to produce the CDs is $250. Ji-Hun estimates the holding cost to be 10% of the price, or about $1 per unit per year. 

(a) What is the optimal number of CDs to produce at a time? 

(b) What is the impact of the following quantity– price schedule on the optimal order quantity?

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QUANTITY ORDERED FROM TO 1 501 1,001 1,501 500 1,000 1,500 2,000 PRICE ($) 10.00 9.95 9.90 9.85