Question: Case 2. (Show all your works: including all computational procedures and details) Mac is considering how to replenish the inventory of a very popular paperback
Case 2. (Show all your works: including all computational procedures and details) Mac is considering how to replenish the inventory of a very popular paperback thesaurus that is ordered monthly. Copies of the thesaurus unsold at the end of the month are still kept on the shelves for future sales. Assume that customers who request copies of the thesaurus when they are out of stock will wait until the following month. Mac buys the thesaurus for $1.15 and sells it for $2.75. Mac estimates a loss-of-goodwill cost of $0.5 each time a demand for a thesaurus must be back-ordered. Monthly demand for the book is fairly closely approximated by a normal distribution with mean 18 and standard deviation 6. Mac uses a 20% annual interest rate to determine his holding cost. How many copies of the thesaurus should he purchase at the beginning of each month?
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