Bell Computers purchases integrated chips at $350 per chip. The holding cost is $35 per unit per year, the ordering cost is $120 per order, and sales are steady, at 400 per month. The com- pany's supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.

a) What is the optimal order quantity and the minimum cost for Bell Computers to order, purchase, and hold these integrated chips? Rich Blue Chip's Price Structure Quantity Purchased 1-99 units 100-199 units 200 or more units Price/Unit $350 $325 $300

b) Bell Computers wishes to use a 10% holding cost rather than the fixed $35 holding cost in part

a. What is the optimal order quan- tity, and what is the optimal cost? .12.21 Wang Distributors has an annual demand for an airport metal detector of 1,400 units. The cost of a typical detector to Wang is $400. Carrying cost is estimated to be 20% of the unit cost, and the ordering cost is $25 per order. If Ping Wang, the owner, orders in quantities of 300 or more, he can get a 5% discount on the cost of the detectors. Should Wang take the quantity discount?