Question 3: The annual demand for an item is 10,000 units. The cost to process an order is $75 and the annual inventory holding cost is 20% of item cost. The price structure is shown below. Quantity Price 1-999 $2.5 per unit 1000-5999 $2.0 per unit 6000 or more $1.85 per unit a) What is the optimal order quantity? b) What price should the firm pay per unit? c) What is the total annual cost at the optimal order quantity? Question 4: Drolet Manufacturing Company, in Saint-Hubert, Quebec, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12000 flashing lights per year and has the capability of producing 200 per day. Setting up the light production costs $100. The cost of each light is $1. The holding cost is $0.10 per light per year. a) What is the optimal size of the production run? b) What is the total cost per year, including the cost of the lights? c) What is the maximum level of inventory