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RAG wants to know how many trucks they should manufacture per week, what is the expected profit, and on average how many customers do

      

RAG wants to know how many trucks they should manufacture per week, what is the expected profit, and on average how many customers do they expect to turn away because of stocking out? Each truck costs $20,000 to manufacture, and the price is $30,000. They will use the forecast assumptions from earlier of a weekly demand that is normally distributed, with a mean of = 2000 and a standard deviation of = 75. Any unsold units at the end of the week will be put on sale for cost ($20,000). It costs $2000 to hold a unit in inventory for the week. Inputs Anticipated demand Standard deviation Unit costs 2000 75 $20,000 Sales price $30,000 Disposal value $20,000 Inventory holding costs $2,000 Salvage value Cost of understocking Cost of overstocking Outputs Optimal cycle service level Optimal lot size Expected profits Expected overstock

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