Bell Computers purchases integrated chips at $350 per chip. The holding cost is $35 per unit per year, the ordering cost is $121 per order, and sales are steady at 400 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 Rich Blue Chip's Price Structure Price/Unit Quantity Purchased 1-99 units 100-199 units 200 or more units $350 $325 $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 structureis units (enter your response as a whole number) The optimal order quantity after the change in pricing structure isunits (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

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Answer:

182; $1,566,350

Explanation:

Holding cost, H = $35 per unit

Ordering cost, S = $121 per order

Demand per year = 400 × 12

                             = 4,800

(a) Optimal order quantity(Q):

[tex]=\sqrt{\frac{2\times D\times S}{H} }[/tex]

[tex]=\sqrt{\frac{2\times 4,800\times 121}{35}}[/tex]

      = 182.17

(b) Minimum/Total cost = Holding cost + Purchasing cost + Ordering cost

Total cost = (Q ÷ 2) × H + (p × Q) + (D ÷ Q) × S

As the EOQ is 181 -- in the range of 100-199 units, the purchasing cost/unit (p) = 325 $/unit

Total cost = (182 ÷ 2) × 35 + 4,800 × 325 + (4,800 ÷ 182) × 120

                = $3,185 + $1,560,000 + $3,165

                = $1,566,350​ (approx)