A printing company uses 2,000 reams of a certain type of paper in a year. The cost

Question:

A printing company uses 2,000 reams of a certain type of paper in a year. The cost of holding one ream of paper in inventory per year US$0.60. The ordering cost per order is US$30.00. The vendor that supplies the paper to the printing company has just announced a quantity discount schedule given in the following table. What is the optimum number of reams to buy at one time?

Quantity Ordered (in reams) Price per Ream (in U.S. dollars) 0 to 499 8.00 7.20 500 to 999 6.20 1,000 to 1,499 1,500+ 5.