Demand for a product satisfying EOQ assumptions is 2000 units / year. Purchase price is $10 /unit. Ordering cost is $100 and holding cost is $2.0/unit / year. If you buy 1000 or more units in one lot (order), the dealer gives you 2% discount (which is all-unit discount) and the unit purchase price is $9.8 as shown in the below table. Note that the discount does not affect the unit inventory holding cost in this case. The lead time (LT) is zero.

1. What is the practical best/optimal order quantity if you decide to order in the range: 999 or fewer?

		450
		400
		500
		350
		550

2. If you use the order quantity of 450 units, what is the Annual Total Cost (Annual purchasing cost + Annual holding cost + Annual ordering cost)?

		$20894
		$20840
		$5394
		$21000
		$20676

Lot size Order Quantity Range: 999 or fewer 10.00 Order quantity range: 1000 and up 9.80 Price: $/unit H ($/unit/year) 2.0 2.0 Qo Lot size Q* Annual costs Purchase $ Ordering $ Holding $ Total $