Question: CU, Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual

CU, Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Annual demand is 50,000 pounds, holding cost is 20% per unit per year of the price of the copper, and the ordering cost is $30. The chart below contains the price breaks.

QUANTITY COST

LESS THAN 2500 POUNDS $0.82 PER POUND

2500 TO 4999 POUNDS $0.81 PER POUND

5000 OR MORE $0.80 PER POUND

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