Amazon sells 20,000 units of consumer electronics from Samsung every month. Each unit costs $100 and Amazon has a holding cost of 20 percent. The fixed clerical and transportation cost for each order Amazon places with Samsung is $4,000.  What is the optimal size of the order that Amazon should place with Samsung? How much as the total annual cost? With the goal of reducing inventories, Amazon would like to reduce the size of each order it places with Samsung to 2,500 units (allowing it to get four replenishment orders every month).  How much should it reduce the fixed cost per order for an order of 2,500 units to be optimal? 

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