A confectioner buys plastic boxes in bulk and uses them to pack chocolates. The annual requirement of these boxes is 1,200, and each box costs $30. The ordering and carrying costs are $10 per order and 20%, respectively. The supplier from whom the confectioner purchases these boxes sells them only in lots of 25, that is, you only purchase quantities in multiples of 25 boxes.

(a) How many boxes should the confectioner order so as to minimise inventory total stocking costs? [10 marks]

(b) If the supplier offers 2% discount on the cost of each box when the purchases are in quantities of 300 at a time, should the confectioner accept this offer? [10 marks]

(c) Suppose the supplier has decided that instead of the 2% discount offer the following price breaks will be used:

ORDER QUANTITY COST PER BOX

Less than 100 $30.00

100 to 199 $29.75

200 or more $29.60

What order quantity should the confectioner make? [15 marks] [