Question: Average demand is 2 , 5 0 0 units per year; order cost is $ 5 0 per order; holding cost rate is 2 0

Average demand is 2,500 units per year; order cost is $50 per order; holding cost rate is 20 percent of the purchase cost per unit per year; and the cost of one unit is $42. What is the total inventory cost per year? If a cost reduction per unit of $1 can be achieved by buying 1,000 at a time, should the buyer take the discount? Justify your answer.

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