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Boat obtains airdopes from its contract manufacturer located in China to serve Indian market / The Indian marketlocatedKolkata. Daily demand at the Kolkata warehouse is

Boat obtains airdopes from its contract manufacturer located in China to serve Indian market/ The Indian marketlocatedKolkata. Daily demand at the Kolkata warehouse is normally distributed, with a
served from a warehouse
mean of 1000 and a standard deviation of 500. Thewarehouse aims for a CSL of 95 percent. The company is debating whether to use sea or air transportation from China, Sea transportation resultsin a lead time of 50 days and costs Rs.1 per airdopes. Air transportation results in a lead time of 3 days and costs Rs.5 per airdopes. Eachairdopes costs Rs.500, and Boat uses a holding cost of 25 percent. Given the minimum lot sizes, Boat would order 30000 airdopes once every in30 days if using sea transport and 5000 once in 5 days if using air transport. To begin with, assume that Boat takes ownership of the inventory on
delivery. [Note FS-1(0.95)=1,64]

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