Assume in season weekly demand for high end beach umbrellas in your store has a mean of
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Question:
Assume in season weekly demand for high end beach umbrellas in your store has a mean of 50 units and a standard deviation of 25 units. Also, it takes two weeks to deliver new supplies after you place an order. Finally you lose $10 per umbrella in lost profit if you don't have any on hand when customers arrive and it cost you $5 to store an umbrella because they are so big.
What base stock (order up to) level should you set for your weekly orders of umbrellas during the season in order to maximize your profits?
Related Book For
Operations Management in the Supply Chain Decisions and Cases
ISBN: 978-0073525242
6th edition
Authors: Roger Schroeder, M. Johnny Rungtusanatham, Susan Goldstein
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