A-Mart sells small-screen television sets in its many retail outlets. Typical total sales for all stores are projected to be 120,000 units. The vendor in South Korea normally sells the sets for $100 US, however, the vendor will offer a $5 discount if a buyer will place a special order of at least 20,000 units. The buyer's carrying cost is 30 percent per year and the cost to prepare purchase orders is $40 per order. Transportation costs are included in the price.
a. Should the buyer accept the discount? If so, what should the special order size be?
b. If the special order is placed, how long will the order size need to be held in inventory?