Suppose that the annual demand for a component is approximately 60,000 units. The company orders the component from a supplier who has offered the following quantity discount schedule.
Order Quantity Price per Unit
0–999……………………… $30
1000–1999………………… $29
2000–3999……………… $28
4000 or more………… $27
If the company’s carrying charge is 15% of the item’s price and the cost per order is $150, determine the order quantity that would minimize the total related inventory costs for this component.