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A large toy company Müttel currently allows toy retailers to place orders with delivery in 2 weeks. The Gigantic Pocket Monster (Gipokmon) is a new toy that Müttel has introduced. Müttel charges a wholesale price of $10 for the Gipokmon. The manager of a small boutique toy retail company, TOYS-are-MINE, plans to sell the toy for $20 and incurs a holding cost of $0.1 per toy per week. At this price, demand per week for the toy at one of their stores is estimated to be Poisson distributed with a mean of 1.5 units. Assume that the backorder cost is equal to the product's retail margin. Assume TOYS-are-MINE uses the order-up-to model to plan orders and deliveries to this store.
a. Suppose TOYS-are-MINE uses an order-up-to level of 10. After receiving their delivery for this week, they have 2 units on-hand. Last week's order was for 5 units. How many units will they order this week? b. Again, suppose they use an order-up-to level of 10 for this store. On average, how many units will this store have on-order?
c. Suppose an order-up-to level of 5 is established. What is the resulting in- stock probability?
d. Suppose an order-up-to level of 3 is established. What would be the expected end-of-period on-hand inventory of Gipokmons?
Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..
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