Q3) Drugs Online is an online retailer of prescription drugs and health supplements. Vitamins represent a significant percentage of its sales. Demand for vitamins is 10,000 bottles per month. Due to lack of proper air conditioning system at DO warehouse, the vitamins has a shelf life of 2.6 weeks. DO incurs a fixed order placement, transportation, and receiving cost of $100 each time an order for vitamins is placed with the manufacturer. DO incurs an annual holding cost of 20 percent. The price charged by the manufacturer follows the all unit discount pricing schedule is shown below. Evaluate the number of bottles that DO manager should order in each lot. What is the annual inventory costs for the optimal solution?

Order Quantity Unit price

0-3999 $8.00

4000-6599 $4.00

6600 or more $3.80

a) Determine the optimal number of bottles that DO manager should order in each lot.

b) If the vitamin bottles has a shelf life of 1.5 weeks what would be your lot sizing decision