EOQ with quantity discounts?

Bell Computers purchase integrated chips at $350 per chip. The holding cost is $35 per unit per year, the ordering cost is $120 per order, and sales are steady, at 400 per month. The company鈥檚 supplier, Rich Blue Chip Manufacturing, Inc., decides to offer price concessions in order to attract larger orders. The price structure is shown below.











Quantity Purchased Price/Unit


1-99 units $350


100-199 units $325


200 or more units $300








a. What is the optimal order quantity and the minimum cost for Bell Computers to order, purchase, and hold these integrated chips?


b. Bell Computers wishes to use a 10% holding cost rather than the fixed $35 holding cost in part a). What is the optimal order quantity, and what is the optimal cost?








I know the EOQ formula which is sort(2KD/h) and I know how to find the total cost with a fixed quantity price. The formula doesn't work for this one though because it doesn't list amount of working days. Any help on what I need to do?