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The note below is for the demand distribution of our chips. We recognize the yearly carrying cost for our inventory is 25% of the
The note below is for the demand distribution of our chips. We recognize the yearly carrying cost for our inventory is 25% of the item value, and the current purchasing price from the supplier is $30 each. It takes $25 to place an order every time, and the lead time for delivery is 54 days given that 30 days in a month. Besides, we implement a policy of maintaining a 99% customer service level. Demand/Month12, 13, 14, 15, 16, 17, 18, 19 Probability0.1, 0.15, 0.15, 0.2, 0.2, 0.1, 0.05, 0.05 How should the inventory be managed for profitability? Be as specific as possible
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To manage the inventory for profitability we can use the Economic Order Quantity EOQ model along with the reorder point to ensure optimal inventory le...Get Instant Access to Expert-Tailored Solutions
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