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A mail-order house uses 16,870 boxes a year. Carrying costs are 60 cents per box a year, and ordering costs are $96. The following price schedule applies.
Number of BoxesPrice per Box1,000 to 1,999 $1.25 2,000 to 4,999 1.20 5,000 to 9,999 1.15 10,000 or more 1.10
a. Determine the optimal order quantity.
b. Determine the number of orders per year.
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