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 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 days earlier. The selling price per day supply bottle of pills is $ Unsold pills have no value and are disposed of at no cost
The marketing forecast for sales is bottles per month with standard deviation of distributed normally. The pharmaceutical firm sells the drug to the retail chain for $ 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?
The order quantity which will maximize the drug chain expected profit is
Group of answer choices
bottles
bottles
bottles
bottles
bottles
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