As an inventory manager, you must decide on the order quantity for an item. Its annual demand is 350 units. Ordering cost is $20 each time an order is placed, and the holding cost is 30 percent of the per-unit price

Your supplier provided the following price schedule.

Price per Unit Order Quantity
$4.00 000 - 199
$3.75 200 - 399
$3.50 400 and more

What is the annual cost discrepancy between the optimal order policy and the second best order policy?
A) Less than $5
B) Between $5 and $10
C) Between $10 and $20
D) More than $20

B