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The next two questions are based on the following information O'Neill Inc. is a designer and manufacturer of apparel, wetsuits, and accessories for water sports.
The next two questions are based on the following information O'Neill Inc. is a designer and manufacturer of apparel, wetsuits, and accessories for water sports. TEC makes a seasonal product named "Epic III" for O'Neill. TEC charges O'Neill $110 per unit when O'Neill places an order at the beginning of the season. O'Neill sells the product at $210 per unit. The salvage value of an unsold unit at the end of the season is $90. 21. If the Newsvendor model is used to calculate O'Neill's optimal order quantity, what would the underage cost be (Cu)? A. $20 B. $90 C. $100 D. $210 22. Suppose that O'Neill is allowed to place a 2nd order in midseason when demand can be accurately forecasted. TEC charges O'Neill a 25% premium above its regular price of $110 on O'Neill's 2nd order dom and guarantees speedy delivery. If the Newsvendor model is applied to calculate O'Neill's optimal 1st order quantity, what should the critical ratio be? Round your answer to four decimal places and write down your steps. [Hint: Quick response with reactive capacity applies here.] Answer both questions please
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