1. The annual demand, ordering cost, and the inventory carryingcost rate for a certain item are D = 600 units, S = $10/order and I= 30% of item price. Price is established by the following quantitydiscount schedule. What should the order quantity be in order tominimize the total annual cost? When we use the quantity discountmodel, what are the two basics elements to take into consideration?Why?
Quantity | 1 to 49 | 50 to 249 | 250 and up |
Price | $5.00 per unit | $4.50 per unit | $4.10 per unit |