Question 5 A warehouse stocks a certain inventory item with a price of $400 per unit The holding cost is $40 per unit per year, the ordering cost is $100 per order, and the monthly demand is 500 units The warehouses supplier decides to offer price discounts in order to attract larger orders The price structure is shown below Quantity purchased Price per unit 1 149 units $400 150 199 units $375 200 249 units $350 250 or more units $330 What is the optimal order quantity and the minimum annual cost for the warehouse to order, purchase and hold the inventory items How much would the warehouse lose if there were no discounts offered by the supplier

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Question: Question 5 : A warehouse stocks a certain inventory item with a price of $400 per unit. The holding cost is $40 per unit per

Question 5: A warehouse stocks a certain inventory item with a price of $400 per unit. The holding cost is $40 per unit per year, the ordering cost is $100 per order, and the monthly demand is 500 units. The warehouses supplier decides to offer price discounts in order to attract larger orders. The price structure is shown below.

Quantity purchased	Price per unit
1 149 units	$400
150 199 units	$375
200 249 units	$350
250 or more units	$330

What is the optimal order quantity and the minimum annual cost for the warehouse to order, purchase and hold the inventory items?
How much would the warehouse lose if there were no discounts offered by the supplier?

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