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Question 6 (5 points) According to the Financial Department, the cost for a short waiting of a customer is $10. When there are: backorder, lost
Question 6 (5 points) According to the Financial Department, the cost for a short waiting of a customer is $10. When there are: backorder, lost sales, lost customer, the costs are: $40, $100, $600 respectively. YY (5 Marks) Figures calculated by the Marketing Department for the last year show the following: 1. 20% of all stock-outs result in short waiting of a customer. 2. 50% of all stock-outs result in a back order. 3. 20% of all stock-outs result in a lost order. 4.10% of all stock-outs result in a lose of a customer. Questions: a. What is the average cost of a stock-out? (2 mark) b. How much should we invest in inventory to reduce the number of stock-outs from 1500 a year to only 500 per year? (3 mark)
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