# solution

Bell Computers purchases integrated chips at ?\$350 per chip. The holding cost is ?\$33 per unit per year, the ordering cost is ?\$119 per order, and sales are steady at 405 per month. The company’s supplier, Rich Blue Chip? Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

Price Range Lower Quantity Upper Quantity Price/Unit
1 1 99 350
2 100 199 325
3 200 999999 300

a) What is the optimal order quantity and the minimum annual cost for Bell Computers to order, purchase, and hold these integrated chips?

The optimal order quantity after the change in pricing structure is _____units ?(enter your response as a whole number).

The total annual cost for Bell computers to order, purchase, and hold the integrated chips is ?\$_____ (round your response to the nearest whole number).

?b) Bell Computers wishes to use a 10?% holding cost rather than the fixed \$33 holding cost in part a. What is the optimal order quantity, and what is the optimal annual cost?

The optimal order quantity after the change in the holding cost calculation is _____units ?(enter your response as a whole number).

The total annual cost for Bell computers to order, purchase, and hold the integrated chips is ?\$______(round your response to the nearest whole number).