Best Buy carries specific computer software recorded on a CD-ROM that sells at an approximate constant rate of 500 packages every three months. Best Buys current buying policy is to order 500 packages of that software each time an order is placed. It costs $30 to place an order, and inventory-carrying costs have an annual rate of 20 percent. With the order quantity of 500, Best Buy obtains the software at the lowest possible unit cost of $28 per package. Other quantity discounts offered by the manufacturer are listed below:

What is the minimum-cost order quantity for the software?

What are the annual savings of your inventory policy over the policy currently being used?

Discount Category Order Quantity Discount Price per package $ 1 0-99 0% 36 2 100-199 11.11% 32 3 200-299 16.67% 30 4 300 or more 22.22% 28