This type of problem can be recognized when annual demand (D), ordering cost (S), and holding or carrying cost per unit (H) are given. Use Formula 12–2 for order quantity, Formula 12–1 for total cost, and D/Q for number of orders a year.

A drone manufacturer uses approximately 32,000 silicon chips annually. The chips are used at a steady rate during the 240 days a year that the plant operates. Annual holding cost is \($3\) per chip, and ordering cost is \($120\). Determine the following:

a. The optimal order quantity

b. The number of workdays in an order cycle.