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A retailer has to decide how many winter jackets to order for the season. The anticipated demand is normally distributed with a mean of u
A retailer has to decide how many winter jackets to order for the season. The anticipated demand is normally distributed with a mean of u = 500 and a standard deviation of a = 150. Each jacket costs $60 to acquire and the introductory sale price is to be $200. Any unsold jackets at the end of the season will be disposed off in a sale for $50 each. It costs $10 to hold a jacket in inventory for the entire season. 1. What is the cost of understocking and overstocking by one unit? What is the optimal cycle service level? 2. How many jackets should be acquired for sale? 3. What is the expected profit? 4. How many jackets on average will have to be disposed off at the end of the season? 5. The manufacturer is offering quantity discounts on orders of 750 or more. If the retailer orders 750 jackets or more the cost to purchase will be $57 instead of $60. How many jackets should the retailer order for sale? What is the expected profit? A retailer has to decide how many winter jackets to order for the season. The anticipated demand is normally distributed with a mean of u = 500 and a standard deviation of a = 150. Each jacket costs $60 to acquire and the introductory sale price is to be $200. Any unsold jackets at the end of the season will be disposed off in a sale for $50 each. It costs $10 to hold a jacket in inventory for the entire season. 1. What is the cost of understocking and overstocking by one unit? What is the optimal cycle service level? 2. How many jackets should be acquired for sale? 3. What is the expected profit? 4. How many jackets on average will have to be disposed off at the end of the season? 5. The manufacturer is offering quantity discounts on orders of 750 or more. If the retailer orders 750 jackets or more the cost to purchase will be $57 instead of $60. How many jackets should the retailer order for sale? What is the expected profit
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