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A mining company routinely replaces a specific part on a certain type of equipment. The usage rate is 4 0 per week and there is

A mining company routinely replaces a specific part on a certain type of equipment. The usage rate is 40 per week and there is no significant seasonality. The supplier of the part offers the following all-units discount structure:

Range of Q Unit Cost

0 < Q < 300 $10.00

300 <= Q $9.70

The fixed cost of a replenishment is estimated to be $25 and a carrying charge of 0.26 $/$/year is used by the company. If the year consists of 50 working week:

a. What replenishment size should be used?

b. If the supplier was interested in having the mining company acquire at least 500 units at a time, what is the largest unit price they could charge for an order of 500 units

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