Question: Bell computers purchases integrated chips at $350 per chip. The holding costs are based on an annual interest rate of 35%, the ordering cost is

Bell computers purchases integrated chips at $350 per chip. The holding costs are based on an annual interest rate of 35%, the ordering cost is $120 per order, and sales are steady, at 400 per month. The company's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price discounts in order to attract larger orders. The price structure is shown below.

Price Range

Quantity Ordered

Price Per Unit

Initial Price

1-99

$350

Discount Price 1

100-199

$340

Discount Price 2

200 or more units

$300

(a) Calculate the EOQ value for each range and identify feasible solutions. Round your responses to the nearest whole numbers.

(b) Identify all possible order quantities that could be the best solution.

(c) Identify the optimal order quantity.

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