Replaced by a unit penalty cost for shortages

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Reference no: EM131106442

Change the ordering simulation so that emergency orders are never made. Instead, assume that all excess demand is backlogged, so the emergency cost should be replaced by a unit penalty cost for shortages. You can use the value $10. Now the inventory position is the amount on hand, plus the amount on order, minus the backlog. Simulate the same (s, S) policies as in the example.

Reference no: EM131106442

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