1. In the calculation of an optimal policy for an all-units discount schedule, you first compute the EOQ values for each of the three order costs, and you obtain: Q(0) =975, Q(1) = 1125, and Q(2) = 1250. The all-units discount schedule has breakpoints at 900 and 1200. Based on this information only, can you determine what the optimal order quantity is? Explain your answer.

2. A sporting goods store must decide how many of this seasons ski parkas to order. Demand is estimated to be normally distributed with a mean of 350 and a standard deviation of 100. Each parka costs the store $100 and is sold for $250. It costs the store $5 to hold a parka the length of the season and any leftover parkas are sold to an outlet store for $85.

a. How many parkas should the sporting goods store order?

b. What are the expected lost sales?

c. What are the expected sales?

d. What is the expected leftover inventory? e. What is the expected profit?