How much variation should be allowed in the delivery service, Operation Management

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How much variation should be allowed in the delivery service

Problem

Suppose that a package courier service promises to deliver to customers at 10:00 am on the morning after pickup. More than 1 hours from the promised delivery time is unacceptable to customers. Due to compensation that the company gives customers for not meeting the promised delivery target, the penalty is $19. How much variation should be allowed in the delivery service? Given : Op Cost = 19 -2.9D and Total Cost = 19 - 2.9D + 19D^2.

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Operation Management: How much variation should be allowed in the delivery service

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