1. A manufacturer of Christmas lights faces demand that is somewhat unpredictable and occurs in such a short burst just prior to Christmas. If inventory is not on the shelves, sales are lost. The decision of how many sets of lights to produce must be made prior to the holiday season. Meanwhile, the cost of collecting unsold inventory and holding it until next year is too high to make year-to-year storage an attractive option. Instead, any unsold sets of lights are sold after Christmas at a steep discount. A set of lights costs $3.6 to make and distribute, and sells for $9.9. Any sets not sold by Christmas will be discounted to $1.4. Demand has been forecasted to be 10,000 units (sets) with a standard deviation of 1,000 units. Normal distribution is a reasonable representation of demand. What is the per unit overage cost?

2. A manufacturer of Christmas lights faces demand that is somewhat unpredictable and occurs in such a short burst just prior to Christmas. If inventory is not on the shelves, sales are lost. The decision of how many sets of lights to produce must be made prior to the holiday season. Meanwhile, the cost of collecting unsold inventory and holding it until next year is too high to make year-to-year storage an attractive option. Instead, any unsold sets of lights are sold after Christmas at a steep discount.

A set of lights costs $4.7 to make and distribute, and sells for $9.4. Any sets not sold by Christmas will be discounted to $1.7. Demand has been forecasted to be 10,000 units (sets) with a standard deviation of 1,000 units. Normal distribution is a reasonable representation of demand.

What is the per unit shortage cost?

3. A manufacturer of Christmas lights faces demand that is somewhat unpredictable and occurs in such a short burst just prior to Christmas. If inventory is not on the shelves, sales are lost. The decision of how many sets of lights to produce must be made prior to the holiday season. Meanwhile, the cost of collecting unsold inventory and holding it until next year is too high to make year-to-year storage an attractive option. Instead, any unsold sets of lights are sold after Christmas at a steep discount.

A set of lights costs $3.3 to make and distribute, and sells for $7.6. Any sets not sold by Christmas will be discounted to $1.2. Demand has been forecasted to be 10,000 units (sets) with a standard deviation of 1,000 units. Normal distribution is a reasonable representation of demand.

In order to get the Newsvendor inventory quantity, the Critical Ratio needs to be calculated. What is the Critical Ratio here? (Two decimal places)