Bell computers purchases integrated chips at ​$350 per chip. the holding cost is ​$35 per unit per​ year, the ordering cost is ​$119 per​ order, and sales are steady at 405 per month. the​ company's supplier, rich blue chip​ manufacturing, inc., decides to offer price concessions in order to attract larger orders. the price structure is shown below. rich blue​ chip's price structure quantity purchased ​ price/unit ​ 1-99 units ​$350 ​ 100-199 units ​$325 200 or more units ​$300 ​a) what is the most​ cost-effective order quantity and the minimum annual cost for bell computers to​ order, purchase, and hold these integrated​ chips, using the data and discount choices​ provided, and using a fixed holding​ cost? the most​ cost-effective order quantity​ (assuming they take the most​ cost-effective discount, and use a fixed holding​ cost) is nothing units ​(enter your response as a whole ​number). at the chosen level of quantity​ discount, and using the fixed holding​ cost, what is the total annual cost for bell computers to​ order, purchase, and hold the integrated chips​ : ​$ nothing ​(round your response to the nearest whole​ number). ​b) bell computers wishes to recalculate using a 10​% holding cost rather than the fixed ​$35 holding cost in part a. what is the most​ cost-effective order​ quantity, and what is the corresponding annual​ cost? the most​ cost-effective order quantity​ (assuming they take the most​ cost-effective discount, and use a​ percentage-of-price holding​ cost) is nothing units ​(enter your response as a whole ​number). at the chosen level of quantity​ discount, and using the ​percentage-of-price holding​ cost, what is the total annual cost for bell computers to​ order, purchase, and hold the integrated chips​ : ​$ nothing ​(round your response to the nearest whole​ number).

1.The most cost-effective order quantity (assuming they take the most cost-effective discount, and use a fixed holding cost) is 182 units.

2. At the chosen level of quantity, discount, and using the fixed holding cost, the total annual cost for Bell computers to order, purchase, and hold the integrated chips is $1,585,898.

1.The most cost-effective order quantity (assuming they take the most cost-effective discount, and use a fixed holding cost) is 189 units.

2. At the chosen level of quantity, discount, and using the fixed holding cost, the total annual cost for Bell computers to order, purchase, and hold the integrated chips is $1,585,546.

We follow these steps to arrive at the

1. We have

Ordering Costs per order  $119

Holding Cost per unit            $35

Demand per month            405 units

Demand per year is                                

Since the most cost-effective order quantity is the Economic Order Quantity (EOQ), we compute the EOQ

where

D is  demand per year

S is the Ordering cost per order

H is the holding cost per unit

Substituting the values we get,

2. The annual costs of ordering, purchasing and holding the integrated chips is the sum of the cost of ordering, purchasing and holding the integrated  chips.

Since the EOQ at 182 units falls in the second slab of Rich Blue Manufacturing, Bell computer can purchase chips at $325 per unit

Cost of purchasing the chips    

Number of orders to placed        

Number of orders to placed        

Number of orders to placed  

Cost of orders                          

Cost of orders                              

Holding Costs                        

Holding Costs                              

Holding Costs                              

Total annual costs      

1. We need to calculate the EOQ, which holding cost at each purchase price

Since the EOQ lies between 100 and 199 units in all the three costs, Bell Computers can purchase the units only at $325 per unit, so its holding cost will be 10% of $325, which is $32.50 per unit.

2.2. The annual costs of ordering, purchasing and holding the integrated chips is the sum of the cost of ordering, purchasing and holding the integrated  chips.

Since the EOQ at 189 units falls in the second slab of Rich Blue Manufacturing, Bell computer can purchase chips at $325 per unit

Cost of purchasing the chips    

Number of orders to placed        

Number of orders to placed        

Number of orders to placed  

Cost of orders                          

Cost of orders                              

Holding Costs                        

Holding Costs                              

Holding Costs                              

Total annual costs