Question: A firm is trying to develop an inventory policy for an item with a one-period life using uncertainty methods. Items can be acquired now for

A firm is trying to develop an inventory policy for an item with a one-period life using uncertainty methods. Items can be acquired now for sale three months hence. Each item costs $6, payable immediately, and will sell for $10 if it is sold at all. If there are not sufficient items to service demand, the firm will incur an after-tax stockout cost of $1 per unit stocked out. Excess items have no salvage value. Tax bills will be paid at the time of sale; the firm is in the 40 percent tax rate,

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