The Rocky Corporation Sells fresh tomatoes at the Rutland Farmer's Market, thetomatoes cannot be carried over to the next order cycle (spoilage). The companypurchases this product from a supplier for $12/unit. The product is then resold for$24/unit. Any product unsold, is sold to an organic farmer for pig feed and Rockyreceives $2/unit.a. What is the cost of under supply?b. What is the cost of over supply?c. What percentage of the time during the reorder period should Rocky be able tosatisfy demand for this product (SLP)? What is the cost of undersupply (notenough inventory)?O 12O 10O 8O 14Question 2What is the cost of oversupply (toomuch inventory)?10O 128O 14Question 3What is the companies Service Level(what percentage of time will they haveinventory)?54.54%50%62.53%45.45%

Purchase Price = $ 12Selling Price = $ 24Salvage Price = $ 2

Answered: a. What is the cost of under supply? b.…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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a. What is the cost of under supply? b. What is the cost of over supply? c. What percentage of the time during the reorder period should Rocky be able to satisfy demand for this product (SLP)?