An online drug store (ODS) sells 15,000 bottles of vitamins per month. It incurs a fixed order cost of $120 per order, and a holding cost of 20%. The manufacturer charges $3.00/bottle, and incurs $2.00/bottle in production, $275/order in shipping and handling, and 20% holding the inventory.

What is the EOQ if the ODS (retailer) makes order decisions? What is the total inventory cost for both the retailer/supplier? What is the EOQ if the supplier makes order decisions? What is the total inventory cost for both the retailer/supplier?

What is the EOQ if the supply chain makes order decisions? What is the total inventory cost for both the retailer/supplier? What is the EOQ for retailer if 20% off purchase price is offered (hint: the product cost is affected) by the manufacturer if order quantity is above the EOQ you obtained from Question 1?