Question: In a typical periodic - review case, it is assumed that the annual demand is 1 0 , 0 0 0 units. The cost of

In a typical periodic-review case, it is assumed that the annual demand is 10,000 units. The cost of making a review is $10 and the cost of placing an order is $25. The cost per unit is $20, the carrying cost is $4 per unit per year, and the shortage cost is $10 per unit independent of duration. It is found that the demand during + is represented by a normal distribution with a mean 10,000(+) and a variance 8,000(+). Determine the optimal values of and (the lead time is 4 months). Assume that shortages are lost sales.

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