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A manufacturer of lawn care equipment has introduced a new product. The anticipated demand is normally distributed with a mean of mu = 1

A manufacturer of lawn care equipment has introduced a new product. The anticipated demand is normally distributed with a mean of \mu =100 and a standard deviation of \sigma =50. Each unit costs $75 to manufacture and the introductory price is to be $125 to achieve this level of sales. Any unsold units at the end of the season are unlikely to be very valuable and will be disposed of in a fire sale for $25 each. It costs $10 to hold a unit in inventory for the entire season. What is the cost of overstocking? Watch out, the salvage value is reduced by the inventory holding cost.

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