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An optometrist orders eyeglass frames at a cost of $ 4 0 per frame and sells each frame for $ 7 0 . Annual holding

An optometrist orders eyeglass frames at a cost of $40 per frame and sells each frame for $70. Annual holding cost is 20% of the optometrist's cost of purchasing a frame. Each time frames are ordered, a cost of $200 is incurred. Because of lost goodwill, a cost of $50 is incurred each time a customer wants a frame that is not in stock. Frames are delivered two weeks after an order is placed with standard deviation of lead time being 1 day. Assuming the 52 weeks =1 year, and 7 day =1 week. Annual demand for frames is N(1,040,400).
a Assuming all shortages are backlogged, determine the order quantity and reorder point.
b Assuming all shortages result in lost sales, determine the order quantity and reorder point.
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