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We expect one of our products to have an annual demand of 1000 units. Daily demand has a standard deviation of 1.0 unit. It costs
We expect one of our products to have an annual demand of 1000 units. Daily demand has a standard deviation of 1.0 unit. It costs $10 to place another order, with a lead time of one week. It costs $15 per unit to make, and $2.50 per unit annually to store.
If we want a 95% chance of not stocking out during a lead time, what is the optimal size of our order and what inventory level should trigger a new order?
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