Sheetz' purchasing department is trying to establish an ordering policy for coffee that will minimize total costs. Forecasted demand for coffee for the next year is 100,000 lbs. The supplier offers the following quantity discount schedule.
Order Quantity Price per pound
0-4,999 12.25
5,000-39,999 10.9
40,000+ 10.81
The purchasing department estimates the cost of placing an order at $112 and the inventory holding cost to be 7% of the unit cost. What is the optimal order size? Please round your answer to the nearest integer.