Exercise 3: Daily demand for a product of a computer manufacturer is 400,000 units. The company,...

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Exercise 3: Daily demand for a product of a computer manufacturer is 400,000 units. The company, on average, makes $150 net profit for each computer. The current fill rate is 86%. About 70% of their incomplete orders are back-ordered, and the rests are cancelled. The company is considering to improve the fill rate to 90% whose estimated daily additional operating cost (e.g., improving the warehousing and transportation) is $2,000,000. What should be the minimum back-order cost to make this investment reasonable? Exercise 3: Daily demand for a product of a computer manufacturer is 400,000 units. The company, on average, makes $150 net profit for each computer. The current fill rate is 86%. About 70% of their incomplete orders are back-ordered, and the rests are cancelled. The company is considering to improve the fill rate to 90% whose estimated daily additional operating cost (e.g., improving the warehousing and transportation) is $2,000,000. What should be the minimum back-order cost to make this investment reasonable?