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A manufacturer uses a particular component for its production process. Each unit of product requires a pair of components. The manufacturer purchases the component from

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A manufacturer uses a particular component for its production process. Each unit of product requires a pair of components. The manufacturer purchases the component from a supplier a that offers the following options: Order Quantity and prices Order Quantity (units/order) Purchase Price (5/unit) 300 160.00 600 155.20 1,000 153.60 The accountant of the manufacturer has estimated that the ordering cost per order is $50 and the annual inventory holding charge is 25% of the unit purchase cost. If the manufacturer plans to make 10.000 units of product next year, what is the best order quantity for the manufacturer? Why? Assume EOQ model is appropriate Shipping Charge (S/unit) 3.00 250 1.80

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