Question: 12.20 Bell Computers purchases integrated chips at $350 per chip. The holding cost is $35 per unit per year, the ordering cost is $120 per

12.20 Bell Computers purchases integrated chips

12.20 Bell Computers purchases integrated chips at $350 per chip. The holding cost is $35 per unit per year, the ordering cost is $120 per order, and sales are steady, at 400 per month. The compa- ny's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price struc- ture is shown below. Rich Blue Chips Price Structure Quantity Purchased Price/Unit 199 units $350 100199 units $325 200 or more units $300 a) What is the optimal order quantity and the minimum cost for Bell Computers to order, purchase, and hold these integrated chips? b) Bell Computers wishes to use a 10% holding cost rather than the fixed $35 holding cost in part (a). What is the optimal order quantity, and what is the optimal cost? BX

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