(Quantity Discount Model) The annual demand for an item is 40,000 units. The cost to process an order is $40 and the annual inventory holding cost is 120% of the unit price per item per year. What is the optimal order quantity, given the following price breaks for purchasing the item?

Quantity	Price
1-1,499	$2.50 per unit
1,500 - 4,999	$2.30 per unit
5,000 or more	$2.25 per unit

a. What is the optimal behavior?

b. Does the firm take advantage of the lowest price available? Explain.