Let's say a retail outlet sells a seasonal product for $10 per unit. The cost of the product is $8 per unit. All units not sold during the regular season are sold for half the retail price in an end-of-season clearance sale. Assume that demand for the product is uniformly distributed between 200 and 800. (please answer a-c) thank you a. What is the recommended order quantity? b. What is the probability that at least some customers will ask to purchase the product after the outlet is sold out? That is, what is the probability of a stock-out using your order quantity in part (a)? c. To keep customers happy and returning to the store later, the owner feels that stock-outs should be avoided if at all possible. What is your recommended order quantity if the owner is willing to tolerate a 0.15 probability of a stock-out?
Let's say a retail outlet sells a seasonal product for $10 per unit. The cost of the product
is $8 per unit. All units not sold during the regular season are sold for half the retail
price in an end-of-season clearance sale. Assume that demand for the product is
uniformly distributed between 200 and 800. (please answer a-c) thank you
a. What is the recommended order quantity?
b. What is the probability that at least some customers will ask to purchase the product after the outlet is sold out? That is, what is the probability of a stock-out using your order quantity in part (a)?
c. To keep customers happy and returning to the store later, the owner feels
that stock-outs should be avoided if at all possible. What is your recommended order
quantity if the owner is willing to tolerate a 0.15 probability of a stock-out?
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