Question: Using the following given information, calculate the following for a single period model (3 points) Cu (cost of underestimating) Cs (cost of overestimating) P (Q*)

  1. Using the following given information, calculate the following for a single period model (3 points)

  • Cu (cost of underestimating)
  • Cs (cost of overestimating)
  • P (Q*) or probability of the optimal order quantity = Cu / (Cu + Cs)

Given Information:

  • C = Cost = $100
  • P = Price = $120
  • S = Sale/Salvage Price = $60

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