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Company A

An electronic retail chain wishes to minimize its ordering costs for a particularly popular model of laptop computer. This retail chain has a line of credit to finance its inventory and the current interest rate is 1.5%. The chain estimates it can sell 30,000 units per year and it pays $575 per unit. It costs $48 to place each order. How many units should it order each time? You should round your answer up to the nearest laptop unit. You must show your work.

Company B

A manufacturer of laptop computers operates a plant with an annual capacity of 6,630,000 laptop units. One of its models is expected to sell 390,000 units in the coming year. How large should each product lot be if it costs $575 to change production from one model to another. Assume that the manufacturer values each laptop unit at $280 and it has a holding interest rate of 2%. You should round your answer up to the nearest laptop unit. You must show your work.