A firm experiences demand with a mean of 100 units per day. Lead time demand is normally

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A firm experiences demand with a mean of 100 units per day. Lead time demand is normally distributed with mean 1000 units and standard deviation 200 units. It costs $6 to hold one unit for one year. If the firm wants to meet 90% of all demand on time, what is the expected annual cost of holding safety stock?

Assume that each order costs $50.

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Practical Management Science

ISBN: 9781111531317

4th Edition

Authors: Wayne L. Winston, S. Christian Albright

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