Describe price-break inventory model

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Q. Assume that annual demand for a part is 40,000 units, ordering cost is $5 per order and annual holding cost of carrying inventory in stock is 10% of cost of unit. A quantity discount will reduce unit price from $5.00 for an order placed between 0 to 2,499 units to $4.95 for an order of size of 2,500 units or more. Using a price-break inventory model which of subsequent is optimal order quantity?

Reference no: EM1374803

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