Question: As the inventory manager, you must decide the order quantity for an item that has an estimated annual demand of 1,400 units. It costs you

As the inventory manager, you must decide the order quantity for an item that has an estimated annual demand of 1,400 units. It costs you $50 each time you place an order and your holding cost is 45 percent of purchase price. Your supplier has provided the following price schedule:

Price/unit Units Ordered $5.00 1-399 $4.90 400-599 $4.80 600 and up Applying the quantity discounts model, answer 3 questions.

1/3) What is the optimal order size?

2/3) What is the optimal annual total cost?

3/3) Assuming the business is open for 350 days/year how many days between orders (order interval)?

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