This is an Integrated Supply Chain Question,

Consider the following scenario for Ryan's Unique DooDad Integrated Supply Chain:

a multi-tiered supply chain consisting of a Wholesaler (W), a Retailer (R), and a Manufacturer (M).

The Wholesaler supplies a product to a Retailer (R), which, in turn, sells the product to end Customers (C).

C pays R $9.50 per unit.

R pays W $6.00 per unit.

W pays the Manufacturer (M) $2.90 per unit.

The costs to M are $1.40/unit.

Note that DooDad sales are seasonal and unsold DooDad are marked down to $1.00 and sold after the end of the season.

The question is :

If W agreed to lower its price to R from $6.00 to $5.50, the service level for the Integrated Supply Chain would remain the same.

In concept, I think the service level should increase, but the correct answer is remain the same. Why? Please show me calculation and explanation, thanks a lot!