A company needs12,000units of a raw material per year. The price per unit varies with the order

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Question:

A company needs 12,000 units of a raw material per year. The price per unit varies with the order quantity as follows:

Up to 2,990 units, $3/unit.

Between 3,000 and 5,999 units, $2.5/unit,

6,000 units or more, $2.00/unit.

The carrying cost is $10/unit on an annual basis).

The order cost is $20 per order.

A. Calculate the economic order quantity (round up), the corresponding total annual inventory cost (no cents), and the number of orders per year (round up)?

B. The CEO wants to get the $2/unit purchasing cost. You need to convince your CEO that the best strategy is to purchase in lot sizes you calculated above. Your CEO asks: How much more expensive (per year), or cheaper, would be to purchase lots of size 6,000?