1. The annual demand for a certain item is N(600,52). Suppose the annual stock level is 600. If demand is less than 600, the annual holding cost of the leftover items is $165 per item. If the demand is greater than 600, then the loss of good is $300 per item.

a. Determine the expected annual cost of shortages or surpluses of this product.

b. Compute the standard deviation of costs.

c. Find two values for which 95% of costs are between those two costs

d. Comment on the stock level of 300. Can you determine the appropriate stock level that minimizes expected cost?

Subject | Mathematics |

Due By (Pacific Time) | 06/17/2013 01:00 pm |

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