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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 and a standard deviation of sigma Each unit costs $ to manufacture and the introductory price is to be $ 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 $ each. It costs $ 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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