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Question 1 (20 Points) Prefab, a furniture manufacturer, uses 20,000 square feet of plywood per month. Its trucking company charges Prefab $400 per shipment, independent of the quantity purchased. The manufacturer offers an all unit quantity discount with a price of $1 per square foot for orders under 20,000 square feet, $0.98 per square foot for orders between 20,000 square feet and 40,000 square feet, and 0.96 per square foot for orders large than 40,000 square feet. Prefab incurs a holding cost of 20 percent. a) What is the optimal lot size for Prefab? b) What is annual cost of such a policy? c) What is the cycle inventory of plywood at Prefab