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A regional service shop for a TV manufacturer keeps a stock of TV circuits. The purchasing lead-time is three weeks, during which the demand
A regional service shop for a TV manufacturer keeps a stock of TV circuits. The purchasing lead-time is three weeks, during which the demand is uniformly distributed on the range [1200, 1500]. A circuit costs $90, and placing an order cost $150. Annual inventory-holding cost is taken to be 25 percent. Shortages are backordered at a fixed cost of $6 per unit short. (a) What is the average lead time demand? (b) What values of Q and r would you recommend to minimize the inventory system cost?
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