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.
