[CUSTOM SOLUTION] A Swimsuit Vendor

(Inventory Management): Consider a swimsuit vendor who sells swimsuits at a unit price of $100 during the summer selling season. The vendor has one ordering opportunity and he orders the swimsuits from the supplier at a unit cost of $30 before the selling season. Unsold swimsuits can be returned to the supplier after summer, with a salvage value of $10 each. The swimsuit vendor expects that the total demand during the summer selling season follows a uniform distribution between 3000 to 6000 units. In this case, what is the unit overage cost? What is the unit underage cost? What is the vendor’s optimal order quantity (round your answers to the nearest integer)?

 

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