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The bookstore at State University purchases from a vendor sweatshirts emblazoned with the school name and logo. The vendor sells the sweatshirts to the store for $38 apiece. The cost to the bookstore for placing an order is $120, and the carrying cost is 25% of the average annual inventory value. 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:
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OrderSize
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Discount%
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1-299
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0
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300-499
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2
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500-799
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4
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800+
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5
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The bookstore manager wants to determine the bookstore's optimal order quantity, given the foregoing quantity discount information.