Read the CASE STUDY: SURPLUS STYLES. Answer the case questions.

$2.$ ATK$-$Blue, a chocolate manufacturer, has decided a plant for one major retail chain. Sales at

the retail chain average about $20,000$ packages a month and production at the plant keep

pace with this average demand. Each package of chocolate cost ATK$-$Blue $3$TL and is sold to

the retailer at a whole sale price of $5$TL$.$ Both ATK$-$Blue and retailer use holding cost of $20$

percent per year. For each order placed, the retailer incurs an ordering the cost of $200$TL per

order placed. ATK$-$Blue incurs the cost of transportation and loading that totals $1000$TL per

order shipped.

a$)$ Given that it is trying to minimize its ordering and holding cost, what lot size will the

retailer ask for in each order? What is the annual ordering and holding cost for the

retailer as a result of this policy? What is annual ordering and holding cost ATK$-$Blue as a

result of this policy? What is the total inventory cost across both parties as result of this

policy?

b$)$ What lot size minimizes the inventory cost $($ordering$,$ delivery, and holding$)$ across both

ATK$-$Blue and the retailer? How much reduction in cost relative to $($a$)$ results from this

policy?

c$)$ Design an all unit quantity discount that results in the retailer ordering the quantity in

$($b$)?$

d$)$ How much of the $1000$TL delivery cost should ATK$-$Blue past along the retailer for each

lot to get the retailer to order the quantity in $($b$)?$