What is the critical probability of keeping and missing

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Reference no: EM133299525

Question: Authentic Thai wicker chairs are delivered once a year to the chain retail store The Kathmandu Shop, by Gary Schwartz. The reorder point without safety stock is 200 chairs. The handling fee for the chairs is $30 per unit per year, and the stockout fee is $70. per unit per year. Given the following demand probabilities during the reorder period, How much safety inventory should be kept?

a) How much does it cost to use that reorder point?

b) How much should the safety stock be to avoid shortages?

c) What is the total marginal cost of carrying and stocking out of safety stock? lower cost?

d) What is the critical probability of keeping and missing

Reference no: EM133299525

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