Use this information to answer the next 4 questions

The supply chain of product X has only one manufacturer and one retailer. The average sales at the retail chain is 10,000 a month and production at the plant keeps pace with this average demand. Each unit of the product costs the manufacturer $3.9 and is sold to the retailer at a wholesale price of $10. Both the manufacturer and the retailer use an annual holding cost of 25%. The order cost for the retailer is $100. The manufacturer incurs the cost of transportation and loading that totals $1,500 per shipment.

What lot size minimizes the inventory cost (ordering + delivery + holding) of the retailer?

		3890 units
		3980 units
		None of the options
		3089 units
		3098 units

What lot size minimizes the inventory cost across the supply chain?

		15102 units
		12510 units
		None of the options
		10512 units
		15120 units

Due to a change in the holding cost, the optimal lot size for retailer changes to 3464 units and for the supply chain changes to 11753 units. How much does the inventory cost (annual holding cost +annual order cost) of the retailer change if the retailer orders the lot size that maximizes the supply chain's profit?

		$8,546
		None of the options
		$5,486
		$8,456
		$5,846

If the retailer orders 10,000 units each time instead of ordering the optimal lot size, its inventory cost will increase by $5954. What is the minimum discount per unit that the manufacturer should offer to encourage the retailer to order in a lot size of 10000 units?

		$0.60 per unit
		$0.50 per unit
		$0.65 per unit
		None of the options
		$0.55 per unit