Answer:
7208.9
Explanation:
Calculate the expected cost per stockout with the following information: Probability of a back order is 67%, lost sale is 22%, and the probability of a lost customer is 11%. The cost per incident of a back order is $50, lost customer is $65,000. The sales price of the item is $12 with a 20% profit margin. The average order is 50.
expected cost is the probability that a certain cost will be incurred multiplied by the cost.
Stockout cost can be defined as the lost income and expense in relation to a shortage of inventory.
Expected cost/stockout=Probability of stockout *expected demand
Probability of a back order is 67%
lost sale is 22%
probability of a lost customer is 11%.
expected demand for back order $50
The average order is 50.
lost customer is $65,000
The sales price of the item is $12 with a 20% profit margin
.67*50+.11*65000+.22*50+1.2*12
33.5+7150+11+14.4
=7208.9
