2. you were asked to examine the inventory policy for the company you work for. you start with its most popular product line. the carry cost for the product is $15 per unit and the reorder cost regardless of the number of units ordered is $40. it sells 75,000 units a year. its current inventory policy is to reorder 700 units each time the inventory goes to zero. 1. is this a good policy? 2. if not why not? 3. what do you recommend?

Many potential buyers value high-quality used cars at the full-information market price of € p1 and lemons at € p2. a limited number of potential sellers value high-quality cars at € v1 ≤ p1 and lemons at € v2 ≤ p2. everyone is risk neutral. the share of lemons among all the used cars that might be potentially sold is € θ . suppose that the buyers incur a transaction cost of $200 to purchase a car. this transaction cost is the value of their time to find a car. what is the equilibrium? is it possible that no cars are sold