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The Inventory Manager (IM) of McDuff Enterprises is assessing the impact of a stockout and wants to quantify that impact; he knows his average customer

The Inventory Manager (IM) of McDuff Enterprises is assessing the impact of a stockout and wants to quantify that impact; he knows his average customer places an order once a month for one item. The average sale for an item of stock is $100 and the average cost from McDuff Enterprises supplier is $80. Assuming 3 potential scenarios when there is a stockout: The customer is brand-loyal and will wait until McDuff Enterprises gets stock, so a delayed sale; the IM assess the probability of this scenario at 10%. The customer goes to a competitor this month, but is brand-loyal to McDuff Enterprises for the remainder of the year; the IM assess the probability of this scenario at 40%. The customer goes to a competitor this month and stays with the competitor for future purchases; the IM assess the probability of this scenario at 50%. What is the probable cost of a stockout for McDuff Enterprises over the year? (8 marks) If the cost of holding an additional 10 units of Inventory is $200, would it be worth adding 10 units of Safety inventory to prevent a stockout, if the Safety inventory prevents 20 stockout situations over the course of

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