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Annual demand for an item of inventory is at a constant rate of 10,000 items. The basic purchase price is $10 each, but the supplier has just introduced a discount offer of 0.2% on orders for 1,000 or more items. Ordering costs amount to $25 per order, and the holding costs are 20% of the cost of average inventory held. At present the company uses an order size of 500 items (which, prior to the discount offer, was optimal). The effect on the company's total annual costs of ordering 1,000 items will be an increase of: A. $248 B. $50 C. $250 D. $48 |