## Answers

**Question 18: A. Service Level = 0.8, Stockout Probability = 0.2**

Selling Price (P) = $3

Cost Price (C) = $1

Salvaging Value (S) = $0.5

Cost of Understocking (Cu) = P - C = $2

Cost of Overstocking (Co) = C - S = 1 - 0.5 = $0.5

Optimum Service Level = Cu/(Cu + Co) = 2/2.5 = 0.8

Stockout Probability = 1 - 0.8 = 0.2

**Question 19:E. BCE , 12**

Path BCE is a path with maximum duration of completion.

So Critical Path : BCE

Project Completion Duration :12

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