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1. Assume the following when determining the right stock level for snowshoes.
1) Assume weekly demand is normally distributed with mean 9 and standard deviation 3.
2) There are 26 rental opportunities in a season. Snow shoes are rented for $40
3) The average lifespan of snowshoes is 5 years
4) REI charges a 67% markup, meaning the $200 retail price implies that the purchase price for REI is 200/1.67 = $1.20
2. What is the cost of having a pair of snow shoes go unrented for a weekend of their useful life? (Think overage)
A) $4.82
B) $0.82
C) $0.92
D) $9.92
3. What is the "cost" of not having a snowshoe that someone can rent (ignore that the person might instead buy a snowshoe and just focus on lost rental revenue).
A) $44
B) $32
C) $40
D) $120
4. What is the profit-maximizing service level for rental snowshoes?
A) .911
B) .879
C) .978
D) .789
5. How many rental snowshoes should they stock?
A) 10
B) 17
C) 15
D) 13
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