What is the optimal order quantity


Annual demand for an item is 50,000 units. The holding cost rate is 45% of the item cost. Ordering costs are $50/ order. Quantity discounts are available according to the schedule below:

Quantity Price per Unit ($)
1-99 units : $80.00
100-299 units: $78.00
300-399 units: $77.50
400+ units: $77.00

What is the optimal order quantity? If necessary, round to the nearest whole number.

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Operation Management: What is the optimal order quantity
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