Bell Computers purchases integrated chips at $350 per chip. The holding cost is 35 percent of the unit price per year, the ordering cost is $120 per order and sales are steady at 5,000 per year. The company’s supplier, Rich Blue Chip Manufacturing Inc., decides to offer price discounts to attract larger orders. The price structure is shown below: Quantity Purchases Price/Unit 1-99 units $350 100-199 units $325 200 or more units $300
a) What is the optimal order quantity?