An online retailer sells an expensive electronic circuit


An online retailer sells an expensive electronic circuit component called EX123. Once every 3 months, a shipment of components is made to this retailer. Past data shows that the demand for EX123 over a 3-month interval is normally distributed with a mean of 60 and a variance of 36. Excess demand is backordered from one 3-month period to the next. The cost of holding an EX123 for one year is $500. In case of backordering, there is a cost of $100 associated with the loss of customer goodwill and a cost of $50 per customer for bookkeeping expenses. How many pieces of EX123 should the retailer be purchasing every three months?

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Financial Accounting: An online retailer sells an expensive electronic circuit
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