Optimal order quantity and the minimum annual cost

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Reference no: EM132247369

Bell Computers purchases integrated chips at ?$350per chip. The holding cost is ?$33 per unit per? year, the ordering cost is ?$118 per? order, and sales are steady at 400 per month. The? company's supplier, Rich Blue Chip? Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

Rich Blue? Chip's Price Structure

Quantity Purchased : 1-99 units, 100-199 units, 200 or more units

Price/Unit : $350, $325, $300

A) What is the optimal order quantity and the minimum annual cost for Bell Computers to? order, purchase, and hold these integrated? chips?

B) Bell Computers wishes to use a10% holding cost rather than the fixed ?$33 holding cost in part a. What is the optimal order? quantity, and what is the optimal annual? cost?

Reference no: EM132247369

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