The W \& S Department Store has a requirement for a product line that amounts to 40,000 units per year. The unit purchase cost of the product is \(\$ 4\). The manager of the store estimates the cost of storage and the loss due to deterioration at 10 cents per unit per month. The store expects 15 percent of return on investment per year. Lead time is 15 days. Ordering and receiving costs are estimated to be \(\$ 20\) per order.

{Required:}

(1) Determine the optimal order quantity.

(2) Determine the reorder point.

(3) What additional cost is incurred if the firm orders in lots of 2,000 units?