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Litely Corp sells 1 , 3 5 0 of its special decorator light switch per year, and places orders for 3 0 0 of these
Litely Corp sells of its special decorator light switch per year,
and places orders for of these switches at a time.
Assuming no safety stocks, Litely estimates a chance of no
shortages in each cycle, and the probability of shortages of
and units as and respectively.
The carrying cost per unit per year is calculated as $ and the
stockout cost is estimated at $$ lost profit per switch and
another $ lost in goodwill, or future sales loss
What level of safety stock should Litely use for this product?
Consider safety stock of and units
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