Option B is the optimal solution because it maximizes similarity search accuracy and performance for a small, proprietary dataset while maintaining low operational complexity. Amazon MemoryDB is a fully managed, in-memory database that provides microsecond-level latency, making it ideal for real-time RAG workloads that require fast vector similarity searches.

For small datasets with low index counts, the Hierarchical Navigable Small World (HNSW) algorithm is recommended by AWS for its high recall and accuracy. Unlike approximate methods optimized for massive datasets, HNSW excels at returning the most semantically relevant vectors with minimal loss of precision, which directly improves the quality of responses generated by the Amazon Bedrock foundation model.

Vertical scaling in MemoryDB is sufficient for this use case because the dataset size is limited. Scaling up instance size provides increased memory and compute capacity without the complexity of managing distributed indexes or sharding strategies. This simplifies operations while maintaining predictable performance.

Option A's Flat algorithm is computationally expensive and inefficient at scale, even for moderate query volumes. Option C introduces higher latency and operational overhead by using a relational database not optimized for in-memory vector search. Option D is unsuitable because Amazon DocumentDB is not designed for high-performance vector similarity workloads and introduces unnecessary replica management complexity.

Therefore, Option B best meets the requirements for accuracy, performance, and efficient integration with an Amazon Bedrock--based RAG application.