Reference no: EM131709620

Suppose that your supplier is offering you the following prices discount schedule. For orders of less than 50 units, the supplier charges you AED 100 per unit; for orders of 50 or more but fewer than 80 units, the unit cost is AED 99 for the quantity above 50; and for orders of 80 units or more, the supplier charges you AED 96 per unit for the quantity above 80 units. Given that the annual demand is 200 units, ordering cost is AED 40 per order, and holding cost is based on a 20 .percent annual interest rate, find the optimal ordering quantity and minimum total variable costs.