The Cappalari Company wishes to determine the amount of safety stock that it should maintain for Product D to result in the lowest cost. The following information is available: Stockout cost............................................................................................. P 80 per occurrence Carrying cost of safety stock................................................................... P 2 per unit Number of purchase orders..................................................................... 5 per year The options available to Cappalari are as follows: Units of Safety Stock Probability of Running out of Safety Stock 10 50% 30 30% 50 10% 55 5% The number of units of safety stock that will result in the lowest cost is:
The Cappalari Company wishes to determine the amount of safety stock that it should maintain for Product D to result in the lowest cost. The following information is available:
Stockout cost............................................................................................. P 80 per occurrence
Carrying cost of safety stock................................................................... P 2 per unit
Number of purchase orders..................................................................... 5 per year
The options available to Cappalari are as follows:
Units of Safety Stock Probability of Running out of Safety Stock
10 50%
30 30%
50 10%
55 5%
The number of units of safety stock that will result in the lowest cost is:
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