Assume That Annual Demand for a Part Is 15,000 Units,the

Assume that annual demand for a part is 15,000 units,the ordering cost is $20 per order and the annual holding cost of carrying inventory in stock is 50% of the cost of the unit.A quantity discount will reduce the unit price from $5.00 for an order placed between 0 to 1,499 units to $4.95 for an order of the size of 1,500 units or more.Using a price-break inventory model,which of the following is the optimal order quantity?

A) 357 units
B) 490 units
C) 1,500 units
D) 1,992 units
E) None of the above

Correct Answer:

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