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Harvey's Specialty Shop is a popular spot that specializes in international gourmet foods. One of the items that Harvey sells is a popular mustard that
Harvey's Specialty Shop is a popular spot that specializes in international gourmet foods. One of the items that Harvey sells is a popular mustard that he purchases from an English company. The mustard costs $ a jar and requires a month lead time for replenishment of stock. The replenishment time is constant. Harvey uses a annual interest rate to compute holding costs. Bookkeeping expenses for placing an order amount to about $ During the month supply time, Harvey estimates that he sells an average of jars but there is substantial variation. He estimates the standard deviation of demand for each month period is Assume that demand is described by a normal distribution. points a What is the optimal order quantity? b What will be the average time between transactions? c How much safety stock should be maintained for cycle service level?
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