(Answered) : of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25 Inventory is salvag

of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25 Inventory is salvaged for $5. What is its maximum profit? $7500 O $12,500 S5000 S8000 XXX)

Expert Answer

Since, stock out costs are 6565, while inventory costs are 2525 and subcontract cost are 75 only, it makes sense to
1. Keep inventory at zero and subcontract units if stock out is happening
2. The rule used will be first fill subcontract to make invenotry zero. Whereever, last month inventory+prod+sourcing- demand is greater than 0, don’t do sourcing.
3. Whereever, without

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