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Q 3. Furnco sells secretarial chairs. Annual demand is normally distributed, with mean of 1040 chairs and standard deviation of 51 chairs. Furnco orders its
Q 3. Furnco sells secretarial chairs. Annual demand is normally distributed, with mean of 1040 chairs and standard deviation of 51 chairs. Furnco orders its chairs from its agship store. It costs $100 to place an order, and the lead time is two weeks (i.e. 1/26 year). Furnco estimates that each stockout causes a loss of $50 in future goodwill. Furnco pays $60 for each chair and sells it for $100. The annual cost of holding a chair in inventory is 30% of its purchase cost. (a) Assuming that all demand is backlogged, What are the reorder point and the safety stock level? (b) Assuming that all stockouts result in lost sales, determine the optimal reorder point and the safety stock level
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