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A 1 Auto Parts stocks standard car batteries according to the following policy: every time inventory drops to 2 0 , order 3 0 .

A1 Auto Parts stocks standard car batteries according to the following policy: every time inventory drops to 20, order 30. The daily demand is Normally distributed with a mean of 6 and a standard deviation of 1, and the lead time is 3 days. The holding cost is $0.05 per day.
What is the imputed cost of understocking, if unmet demand is backordered? What does this mean?
After interviewing the manager, you discover that whenever a standard battery is backordered, the salesperson will substitute a different, higher-quality battery for the customer, which costs the firm an extra $6.25. Given this information, how should A1 change their reorder point?

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