Question: Please consider the following data for a perishable product: Purchase cost: $2 per piece Revenue: $4 per piece Products that are not sold at the

Please consider the following data for a perishable product:

  • Purchase cost: $2 per piece
  • Revenue: $4 per piece
  • Products that are not sold at the end of the season can be salvaged for a price of $1 per piece
  • Demand is normally distributed with a mean of 3,000 pieces and a standard deviation of 500 pieces.

    What is the underage cost (Cu)?

    What is the overage cost (Co)?

  • What is the target service level?

  • What is the optimal order quantity?

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