C. The bookstore at State University purchases sweatshirts emblazoned
with the school name and logo form a vendor. The vendor sells the
sweatshirts to the store for $38.00 apiece. The cost to the bookstore
for placing an order is $120.00, and the carrying cost is 25% of the price paid per shirt
The bookstore manager estimates that 1,700 sweatshirts will be sold
during the year. The vendor has offered the bookstore the following volume
discount schedule.
Order Size Discount %
1-299 0
300-499 3
500-799 5
800 + 6
The bookstore manager wants to determine the bookstores’ optimal order
quantity given the foregoing quantity discount information.