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The leadership team at AquaLux, a prominent bath soap manufacturer, is aiming to optimize their inventory expenses. The cost incurred weekly for holding a single
The leadership team at AquaLux, a prominent bath soap manufacturer, is aiming to optimize their inventory expenses. The cost incurred weekly for holding a single unit of soap in stock amounts to where one unit equates to soap cases The marketing division has projected a weekly demand with an average of units and a standard deviation of units. This demand follows a relatively accurate normal distribution pattern. Sales exceeding the available soap quantity result in lost sales; in other words, there's no backlog for unmet demand.
The manufacturing department can operate at one of three production capacities: or units per week. A production level shift incurs a cost The management intends to assess the following production strategy: When the existing inventory falls below L units, they will manufacture units in the subsequent week. If the current inventory surpasses U units, they will produce units in the upcoming week. In all other cases, AquaLux will maintain the previous week's production level. At present, AquaLux maintains an inventory of units. The production level from the prior week was set at units.
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