A manufacturing firm has been offered a component part it uses according to the following discount pricing schedule provided by the supplier:
QTY_________________PRICE/UNIT
1 - 199....................................$65
200 - 599.................................$59
600+......................................$56
The company uses 700 of the components annually. Annual carrying cost is $14 per unit, and ordering cost is $275.
a) Determine the amount the company should order.
b) If the supplier was willing to negotiate, and the company preferred to take delivery of its annual supply of the part in a single order, at what price per unit would that become economical?