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Management is attempting to determine its current average stockout costs based on it's 3 categories of customers: Loyal, Ambivalent (may return), and Lost. Based on
Management is attempting to determine its current average stockout costs based on it's 3 categories of customers: Loyal, Ambivalent (may return), and Lost. Based on the historical losses and a frequency analysis of the customer data, the following table was developed:
Category | Loss | Probability |
Loyal | $0 | 0.12 |
Ambivalent | $53 | 0.37 |
Lost | $977 | 0.51 |
Determine the average cost of a stockout. Round to the nearest penny, if applicable. Do not enter the $ symbol.
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