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A small mail-order company uses 16,000 boxes a year. Holding cost rate is 16 percent of unit cost per year, and ordering cost is $31 per order. The following quantity discounts are available.
Number of Boxes Price per Box
1,000 to 1,999 $1.40 2,000 to 4,999 $ 1.35 5,000 to 9,999 $1.30 10,000 or more $1.25
a. Determine the optimal order quantity.
Optimal order quantity = ? boxes
b. Determine the number of orders per year. (Round the final answer to 1 decimal place.)
No. of orders per year = ?
You manage a highly motivated salesperson that exceeds his quota each year.
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