The bookstore at State University purchases sweatshirts emblazoned with the school name and logo from a vendor. The vendor sells the sweatshirts to the store for $38 apiece. The cost to the bookstore for placing an order is $120, and the annual carrying cost is 25 percent of the cost of a sweatshirt. The bookstore manager estimates that 1,700 sweatshirts will be sold during the year. The vendor has offered the bookstore the following volume discount schedule: Order Size Discount
1-299 0%
300-499 2%
500-799 4%
800+ 5%
The bookstore manager wants to determine the bookstore’s optimal order quantity, given this quantity discount information.