A mail-order house uses 18,000 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The following price schedule applies.
Number of Boxes Price Per Box
1,000 to 1,999 $1.25
2,000 to 4,999 $1.20
5,000 to 9,999 $1.15
10,000 or more $1.10
Determine the following:
a. The optimal order quantity.
b. The number of orders per year.