Question: A manager has just received a revised price schedule from a vendor. What order quantity should the manager use in order to minimize total costs?

A manager has just received a revised price schedule from a vendor. What order quantity should the manager use in order to minimize total costs? Annual demand is 120 units, ordering cost is $10 per order, and annual carrying cost per unit is 10% of the unit price/cost.

Quantity --------------------- Unit Price

1 - 40 ----------------------------- $16

41 - 69 --------------------------- $13

70 or more ---------------------- $10

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