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Consider the pharmacy in OPER Health Center (your assignment 1). The pharmacy stocks and sells a number of product categories including disease prevention and wellness,

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Consider the pharmacy in OPER Health Center (your assignment 1). The pharmacy stocks and sells a number of product categories including disease prevention and wellness, illness treatment, as well as health monitoring and management. One of the key concerns for the pharmacy is the management of highly perishable products. Among these, vaccinations take the lead. Seasonal flu vaccines have a season of 6 months and highly uncertain demand. They are usually ordered before the season begins from a handful of global manufacturers. Often times, the initial supply is what is used to serve demand; second order opportunities are quite rare. Leftover flu vaccines have very little value because the strain changes from year to year and manufacturers have to produce new vaccines for each season. Other vaccines (e.g. for Hepatitis, Mmr) have typically longer selling seasons ( 1 year) and have higher salvage values. Vaccines contain live viruses hence need to be kept stored in controlled environments. As a result, they bring additional stocking, selling and general costs to the pharmacy. The table below depicts the basic information related to one representative product from each category. These products can be considered as "typical" products for their respective categories in that their demand profiles, margins, turns, SG\&As are in tune with the category averages. The relevant data on price, purchasing cost, clearance price (for salvaging unsold units at the end of the season), as well as demand in the season for the OHC pharmacy is given below. What is the unit underage cost and overage cost for these two products? How many units of each product should OHC Pharmacy stock to maximize expected profits? If the objective of OHC Pharmacy is to achieve 99% service rate for both products, what should the order quantities be

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