Stock out cost determination
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I need to determine stockout cost for a problem but don't think I have enough information.
40 percent of stockouts will result in a back order with a cost of $5.00 per back order; 40 percent of the stockouts result in a lost sale and a profit of $50.00 per unit; and 20 percent of the stockouts result in a lost customer and with an extimated loss of $100.00.
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The solutions contains calculations of stock out cost.
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Hi,
Please see response to your posting as detailed out below.
There are three probable outcomes of a stockout situation.
1. Backorder with $5.00, sort of penalty.
2. Lost sale with profit loss of $50.00, which is ...
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