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Two alternatives, code-named X and Y, are under consideration at Donat Corporation. Costs associated with the alternatives are listed below.
Alternative X Alternative YMateirals costs.........$44,000 $56,000Processsing costs......$37,000 $59,000Equipment rental......$14,000 $14,000Occupancy costs.......$11,000 $11,000
What is the differential cost of Alternative Y over Alternative X, including all of the relevant costs?
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Kelly does not want to be out of stock on more than 1% of his orders. There is a one-day delivery time. The standard deviation of demand is five plugs per day. Assume a normal distribution of demand during lead time and a 7-day work week.
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