A large toy company Muttel currently allows toy retailers to place orders with delivery in

Question: A large toy company Muttel currently allows toy retailers to place orders with delivery in 2 weeks. The gigantic Pocket Monster (Gipokmon) is a new toy that Muttel has introduced. Muttel charges a wholesale price of $10 for the Gipokmon. The manager of a small boutique toy retail company TOYS-are-MINE, plans to sell the toy for $20 and incurs a holding costA large toy company Muttel currently allows toy retailers to place orders with delivery in 2 weeks. The gigantic Pocket Monster (Gipokmon) is a new toy that Muttel has introduced. Muttel charges a wholesale price of $10 for the Gipokmon. The manager of a small boutique toy retail company TOYS-are-MINE, plans to sell the toy for $20 and incurs a holding cost of $0.1 per toy per week. At this price, demand per week for the toy at one of their stores is estimated to be Poisson distributed with a mean of 1.5 units. Assume that the backorder cost is equal to the product’s retail margin. Assume TOYS-are MINE uses the order-up-to model to plan orders and deliveries to this store.
e. Suppose an order-up-to level of 3 is established. What would be the expected end-of-period on-hand inventory of Gipokmons? (Answer to 2 decimal places)
Answer: e) holding cost, h= $0.01 Backorder c…View the full answer