The Toy Store has the following data. One of their main sellers, the Bucking Bronco, costs $5 to stock and accounts for sales of 4,500 units sold per year.

Each order for the Bronco cost roughly $250 and takes on average 5 days to be delivered, with the possibility of 3 day delays.

a.What is the optimal order size for Bucking Bronco?

b.At what point should the Bucking Brnco be re-ordered to assure that the store never runs out?

Recently, you received an invoice which stated that the supplier would offer terms of 2 /15, net 30.

• You have a line of credit with your bank at an EAR (effective annual rate) of 10.0% per year on outstanding loans.
• Should you accept the discount offer? Please explain why or why not. Show calculation to get credit