Question: The office manager for an insurance company orders letterheads stationary from an office products firm in boxes of 500 sheets. The company uses 6,500 boxes per year. Annually carrying costs are $3 per box, and ordering costs are $28. The following discount price schedule is provided by the office supply company.

Order quantity (boxes) $per box.
200-900 $16.
1,000-2,999 $14.
3,000-5,999 $13.
6,000+. $12.

Determine the optimal order quantity and the total annual inventory cost.