A company makes a product at a constant cost of $70 per unit and sells the product at $100 per unit. An unused unit of product has a salvage value of $50. Demand for the product is random, with a normal distribution with mean at 2000 units and standard deviation at 150 units.
A) What is the cost of underage per unit?
B) What is the cost of overage per unit?
C) What is the critical fractile?
D) Based on the critical fractile determined in (c), the company would expect _______% of their customers to experience stock out.
E) What is the optimal stocking level?