Question $22(20$ points$)$

Shipments $of$ Product A from a distribution center $to$ a retailer are made $in$

lots $of400.$ The retailer's average demand for $Ais75$ units per week. Lead

time from distributor $to$ retailer $is3$ weeks. The retailer pays for the

shipments when they leave the distributor. The distributor has agreed $to$

reduce the lead time $to2$ weeks $if$ the retailer will purchase quantities $of$

$500$ per shipment instead $of400.$ With the change $in$ purchased quantities,

the average cycle inventory will:

increase $by75$ units

decrease $by100$ units

decrease $by75$ units.

increase $by50$ units.

increase $by100$ units

decrease $by50$ units

decrease $by25$ units.

increase $by25$ units.