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Consider an infinite sequence of periodic, independent and identically distributed demands for a single item, where inventory can be held from one period to

 
 

Consider an infinite sequence of periodic, independent and identically distributed demands for a single item, where inventory can be held from one period to another at a cost of $10 per unit per period. Suppose there is a loss of goodwill cost of p = 50 per unit short when stockouts occur. Each unit sells for $280 and costs $150 to produce. Assume zero lead time. What is the optimal critical ratio for an order up to policy assuming all shortages are backordered?

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