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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 $ per frame and sells each frame for $ Annual holding cost is of the optometrist's cost of purchasing a frame. Each time frames are ordered, a cost of $ is incurred. Because of lost goodwill, a cost of $ 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 day. Assuming the weeks year, and day week. Annual demand for frames is
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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