PeCo sells a single type of mobile phone screen protector. Theannual demand for the its screen protectors is 50,000 units anddemand seems to be continuous and uniform throughout the year. Theycurrently sub-contract a local manufacturer to produce the screenprotector for them at a cost of $3 per unit. The fixed costassociated with each delivery of screen protectors is estimated at$1,200 and careful analysis of quality assurance data has shownthat a product held for a whole year in stock has a 0.1 probabilityof being faulty. This probability is linear with the time spent instock, i.e., products spending 6 months in the
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