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Based on historical research, a company had the following stockout cost estimates: Probability of a backorder is 2 0 % , lost sale is 5
Based on historical research, a company had the following stockout cost estimates: Probability of a backorder is lost sale is and the probability of a lost customer is The cost per incident of a backorder is $ lost customer is $ and lost sale is $
What would be the difference in stockout costs if the company did a recent analysis and learned that their customer reaction behaviors had shifted...now, twice as many customers will backorder, and will result in a lost sale?
A cost increase of roughly $
No change in cost
A cost decrease of roughly $
A doubling in stockout costs
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