Question: Use the following problem to answer the next 9 - 2 1 questions. A retail drug chain purchases a newly developed drug in pill form

Use the following problem to answer the next 9-21 questions.
A retail drug chain purchases a newly developed drug in pill form from a pharmaceutical firm and sells it to the public. The drug is unique in the sense that its active ingredient expires quickly and the retailer cant sell pills which are purchased more than 30 days earlier. The selling price per 30-day supply (bottle) of pills is $340. Unsold pills have no value and are disposed of at no cost.
The marketing forecast for sales is 120,000 bottles per month with standard deviation of 20,000, distributed normally. The pharmaceutical firm sells the drug to the retail chain for $110 per bottle.
What is the cost of underage (underestimating demand) by one bottle of the drug?
What is the cost of overage (overestimating demand) by one bottle of the drug?
What service level (probability of satisfying demand) should the retail drug chain provide?
Group of answer choices
0.50050
0.3235
0.8611
0.9211
0.6765

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