The annual demand, ordering cost, and the annual inventory carrying cost rate for a certain item are D = 600 units, S =

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The annual demand, ordering cost, and the annual inventory
carrying cost rate for a certain item are D = 600 units, S =
$20/order and I = 30% of item price. Price is established by the
following quantity discount schedule. What should the order
quantity be in order to minimize the total annual cost?
Quantity
1 to 49
50 to 249
250 and up
Price
$5.00 per unit
$4.50 per unit
$4.10 per unit
Questions:
1) What is the optimal order quantity, given the following price
breaks for purchasing the item?
2) What is the total annual cost at the optimal behavior? What’s
is your recommendation?