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Supplier of a component offers an all-unit quantity

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Suppose a supplier of a component offers an all-unit quantity discount that charges $50 per unit for orders of no more than 500 units and $42 per unit for any bigger orders. A manufacturer purchases 5,000 units of the component from the supplier every year. The setup cost is $20 per order and the inventory holding cost is 10% of the unit cost. What is the optimal order quantity for the manufacturer? Find the closest value.

Reference no: EM131894880

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