7. dentity the appropriate irnventory model to obtan the opimal lot size for the

Question

7.

dentity the appropriate irnventory model to obtan the opimal lot size for the given problem descripton Rick Jones ls chairman of this year's Walk for Diabetes event Each year, the organizers of the event typically have commemorative T-shirts avaiable for purchase by the entrants in the walk. Rick needs to order the shirts well in advance of the actual event. Based on past waks, the organizers have determined hat the demand for T-shins is nomally distriouted with a mean of 100 and a standard deviation of 10. Rick plans to sel the T-shirts for $20 each He pays his supplier s8 for each shirt and can sell any unsold shirts for rags at 52 each. Determine how many T-shirts Rick should order so maximize his expected profits Select one: b. Fixed Order Interval O c Single Perlod Od. None of the listed e ROP

Explanation / Answer

In this question single period method should be used obtain the optimum inventory to be ordered.

Single period inventory model takes the probability distribution of the demand and price and quantity ordered. The excess quantity can be modelled in this method. EOQ,ROP, and fixed order interval are used when we are using and part or T-shirts at regularly and need to order that Tshirt in continuous intervals of time. hence, single period is the best option.

Option C, Single period

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