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Nano Kdg Itd has developed the following discrete probability distribution for demand during lead time and needs to determine the appropriate reorder point with safety

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Nano Kdg Itd has developed the following discrete probability distribution for demand during lead time and needs to determine the appropriate reorder point with safety stock with the aim to minimize additional holding and stockout costs per year. Stockout costs are $13 per unit. Holding costs are $17 per unit per year. The company places 9 orders per year. Assume all quantities (bought and sold) must be in multiples of 20. PROBABILIT DEMAND DURING LEAD TIME (UNITS) 20 40 Y 0.2 0.3 10.35 0.05 0.1 60 80 100 The expected lead time demand is units. The reorder point without safety stock is units. The optimal reorder point (including safety stock if any) is units: The optimal reorder point is associated with an annual expected total additional holding plus stockout costs of $ The optimal reorder point carries a service level of %

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