Question: An item ( a pharmaceutical compound ) has a unit cost of $ 3 0 . ( A unit is a 2 mg portion of

An item (a pharmaceutical compound) has a unit cost of $30.(A unit is a 2 mg portion of active ingredient plus an inert ingredient, plus a glass container). Total usage for the year is 5000 units. Order costs are $100 per order. The item is highly perishable and it must be stored at extremely cold temperatures, which is costly. Your company uses an annual carrying cost of 30%(to account for the opportunity cost of capital, physical storage costs, and so on). The supplier has given you the choice of ordering in quantities of 200,300,450 or 600. If you order in lots of 600, the supplier will reduce your cost per unit to $26.
What is the order quantity that yields the lowest total acquisition cost?

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