In some ordering problems, like the one for Sam’s Bookstore, whenever demand exceeds existing inventory, the excess demand is not lost but is filled by expedited orders—at a premium cost to the company. Change Sam’s model to reflect this behavior. Assume that the unit cost of expediting is $40, well above the highest regular unit cost.

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis
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. In some ordering problems, like the one for Sam’s
Bookstore, whenever demand exceeds existing inventory, the excess demand is not lost but is filled by
expedited orders—at a premium cost to the company.
Change Sam’s model to reflect this behavior. Assume
that the unit cost of expediting is $40, well above the
highest regular unit cost.

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