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# Wiley's TV Town sells VCR's. Weekly demand has averaged 40 VCR's per week. Wiley makes a gross profit of \$50 per VCR sold (not including inventory...

Wiley’s TV Town sells VCR’s. Weekly demand has averaged 40 VCR’s per week. Wiley makes a gross profit of \$50 per VCR sold (not including inventory costs). Holding costs are \$260 per VCR per year and reorder costs are \$42 per order. Lead time is 1 week and the store operates 52 weeks in a year.

a) Determine: (I) the optimal number of VCR’s Wiley should order (integer value) (ii) the cycle time (in weeks); and, (iii) his yearly net profit.
b) Wiley is considering allowing backorders. Wiley intends to offer customers a discount of \$20 per week for each week the customer must wait for a VCR. Wiley estimates that this policy will result in a drop in demand to 36 VCR’s per week. Order and holding costs will remain the same. Should Wiley adopt this policy? Why or why not?
What is the maximum backorder?"

Wiley’s TV Town sells VCR’s. Weekly demand has averaged 40 VCR’s per week.
Wiley makes a gross profit of \$50 per VCR sold (not including inventory costs).
Holding costs are \$260 per VCR per...

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