The Q Milk Co. is a distribution company located in Madrid, that produces and distributes dairy products and beverages in Spain. They have recently grown and now also distribute product in other European and Latin America countries. The company started 40 years ago and was the first to introduce a revolutionary packaging (TetraPak) made of plastic, aluminum and cardboard that increases the shelf life of milk and juice. One of their most important suppliers, the Global Packaging Co., supplies the FourPak5.0 package. The Q Milk Co. has a long-term and a very stable relationship with the Global Packaging Co. Indeed, the demand of FourPak5.0 is very steady at 7,500 units per month.

The Q Milk Co. has an annual holding cost of 25 percent (based on an annual interest rate). Purchasing a FourPak5.0 package costs Q Milk Co. $0.3 per unit, and they sell on an average price for $1.2 per unit. It costs the Q Milk Co. $224 to place an order, and the Global Packaging Co. recently imposed their customers to order in multiples of 100. For this problem assume there are 364 days per year.

PART 1

Determine the optimal order quantity of FourPak5.0 for the Q Milk Co. to purchase. Remember that you have to order in multiples of 100 (round your answer UP).