1. The annual demand for Ergo-chairs sold in an office supply chain is 1,200 units. Ordering cost per order is $50, holding rate is 40%, and unit cost is $200. The company is offered the following quantity discount scheme: For an order of up to 119 units no discount. For an order up to 699 units- a discount of 25%, and for a larger order -a discount of 30%. Use the discount template to answer.
   1. What is the order size that minimizes total inventory cost under the discount scheme? Enter the answer in the answer sheet.
   2. Show the calculation of the minimum total cost for the order size you selected as optimal in part 1.1. Show all the cost components in the answers sheet (annual ordering, etc.). Writing the formulae is not enough. Substitute the correct values in them.
   3. Refer to 1.1. Show how the cycle time is calculated (again, substitute the correct vales and show).
   4. Refer to 1.1. Suppose the lead time required by the supplier is 1.5 months (consider 12 months a year). For the inventory at hand when an order is placed (re-order point), the template returns 30. Show how this value is calculated.
   5. The seller is willing to change the third breakpoint of 700 in order to convince the buyer to order more than the quantity found in part 1.1. What is the largest breakpoint (instead of 700) that may convince the department store to increase its order size, above the order you found in part 1.1? Base your answer on total cost. Do not include the lead time of question 1.4. Use the discounts template, and search with only whole values (for example, 500, 501, etc.). You can use Goal Seek. Enter your answer in the answers sheet (if needed round down).