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What is the value of k that follows from item short penalty

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Penalty per item short

A product has a normally distributed demand of 240 units per month, a monthly holding cost of $0.25 per unit and a penalty per unit short of $5. Currently we are ordering this product through an (R,S) policy, R of 2 months and average order quantities of Q = 480.

Question 1: What is the value of k that follows from a $5 per item short penalty?

Question 2: For this value of k, what is the corresponding value of G(k)? Give your answer with four decimals.

Reference no: EM132580385

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