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20 July, 08:37

A manufacturer of lawn care equipment has introduced a new product. The anticipated demand is normally distributed with a mean of μ = 100 and a standard deviation of σ = 50. Each unit costs $75 to manufacture and the introductory price is to be $125 to achieve this level of sales. Any unsold units at the end of the season are unlikely to be very valuable and will be disposed of in a fire sale for $25 each. It costs $10 to hold a unit in inventory for the entire season.

A.) What is the cost of overstocking (Co) ?

B.) What is the cost of understocking (Cu) ?

C.) What is the optimal cycle service level?

D.) How many units should be manufactured for sale?

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  1. 20 July, 09:11
    0
    Answer:Expected profit = $2657a
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