The Super Discount Store (Open 24 Hours a Day,every Day)sells

question 1

Essay

The Super Discount store (open 24 hours a day,every day)sells 8-packs of paper towels,at the rate of approximately 420 packs per week.Because the towels are so bulky,the annual cost to carry them in inventory is estimated at $0.50.The cost to place an order for more is $20,and it takes four days for an order to arrive.
a.Find the optimal order quantity.
b.What is the reorder point?
c.How often should an order be placed?

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Definitions:

Accepting Risk

Accepting risk involves recognizing and undertaking the chance of loss or damage in the expectation of a potential gain.

Systematic Risk

The risk inherent to the entire market or an entire market segment, also known as non-diversifiable risk or market risk.

Diversification

Strategy of spreading investments across various financial assets, industries, or other categories to reduce risk.

Inflation Risk

The hazard that the value of assets or income will be eroded as inflation shrinks the value of a country's currency.