How much safety stock should be, Operation Management

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How much safety stock should be

Consider the following: Order point without safety stock is 200. Carrying cost is $40 per unit per year. Cost of a stock out is $70 per unit per year. The probability of demand during lead time is as follows: Demand During Lead Time Probability 0 .1 100 .2 200 .2 300 .2 400 .3

How much safety stock should be carried?

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Operation Management: How much safety stock should be

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Operation Management: How much safety stock should be

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