Question: Johnson Electronics sells electrical and electronic components through catalogs. Catalogs are updated and printed every year. The variable production cost is $5 per catalog. Data
Johnson Electronics sells electrical and electronic components through catalogs. Catalogs are updated and printed every year. The variable production cost is $5 per catalog. Data indicate that, on average, each printed catalog generates a profit of $25 from sales (i.e., $30 revenue). What is the optimal service level for the catalogs printing decision? Please identify Cu (under-stocking cost) and Co (over-stocking cost), and calculate the optimal service level. Please briefly explain your calculation logic to show the work.
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