Zip Games Purchases Blank DVD Disks onto Which It Copies

question 33

Essay

Zip Games purchases blank DVD disks onto which it copies its software for sale through its mail-order operation.A disk costs Zip $0.20.Processing an order for more disks cost $15.Zip uses 60,000 disks annually,and the company has a 25% cost of capital.
a.Find the optimal order quantity.
b.How many orders are placed annually?
c.How frequently will orders be placed?

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Definitions:

Supply Curve

A graph that shows the relationship between the price of a good and the quantity of the good that producers are willing to supply.

Demand Curve

A representation that shows the quantity of a particular good or service that consumers are willing and able to purchase at various prices.

Government Intervention

Actions taken by the government to influence or directly control economic or market conditions.

External Costs

Costs incurred by third parties who are not involved in a transaction, often leading to market failure if not properly accounted for.