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A Mexican mug manufacturer observes a demand of about 100,000 mugs per year from its US market. To meet the demand, the manufacturer chooses an
A Mexican mug manufacturer observes a demand of about 100,000 mugs per year from its US market. To meet the demand, the manufacturer chooses an optimal order quantity to be shipped to the DC in Phoenix. The cost per order transaction, which includes transportation, is $2,500, and the inventory holding cost is $0.35 per mug. However, due to transportation limits, the manufacturer has to delay certain orders, allowing for backorders. The backorder cost per mug is about $1.5. What is the optimal backorder quantity that the manufacturer should allow for
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