M. P. VanOyen Manufacturing has gone out on a bid for a regulator component. Expected demand is 700 units per month. The item can be purchased from either Allen Manufacturing or Baker Manufacturing. Their price lists are shown in the table. Ordering cost is $45, and the annual holding cost per unit is $44.
Allen Mfg. Baker Mfg. Quantity Unit Price Quantity Unit Price
1-499 $16.00 1-399 $16.10
500-999 15.50 400-799 15.60
1000+ 15.00 800+ 15.10
a) What is the optimal order quantity and the total annual cost of ordering, purchasing, and holding the component?
The optimal order quantity is -----? with a total cost of $--------?