Question: Reconsider the retailer from problem 1) (with the same demand and setup cost and with holding cost now equal to 20% of the purchase price).

Reconsider the retailer from problem 1) (with the same demand and setup cost and with holding cost now equal to 20% of the purchase price). Assume that quantity discounts are available as in the table below:

(Problem 1) A retailer consistently sells about 1000 products per month. Each order has a setup cost of $320, a lead time of 3 days and the annual holding cost is $3 per unit.

Order Quantity	Purchase Price	Q*	Effective Q	TC
Q < 3000	$15
3000 Q < 15000	$14
Q 15000	$13

Determine the Effective Q and calculate TC, the total cost, for each possibility. To minimize costs, how many units should the retailer order? ____________

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