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4. MC Cooper hired a consultant to establish an optimal safety stock quantity for his company. Before the consultant could start with his work,
4. MC Cooper hired a consultant to establish an optimal safety stock quantity for his company. Before the consultant could start with his work, he talked to the company accountant to gather relevant financial information. The given pieces of information are as follows: Supplier's net invoice price Carrying costs rate P4,000 10% 6 Number of orders per year 24 Stock-out costs per occurrence +8,600 Probability of stock-outs: 18,600 Safety stock Probability of stock-out 0 90% 100 60% 200 40% 300 25% 400 10% Determine the optimal safety stock quantity.
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