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Identify the appropriate inventory model to obtain the optimal lot size for the given problem description: rick jones is chairman of this year’s walk for diabetes event. each year, the organizers of the event typically have commemorative t-shirts available for purchase by the entrants in the walk. rick needs to order the shirts well in advance of the actual event. based on past walks, the organizers have determined that the demand for tshirts is normally distributed with a mean of 100 and a standard deviation of 10. rick plans to sell the t-shirts for $20 each. he pays his supplier $8 for each shirt and can sell any unsold shirts for rags at $2 each. determine how many t-shirts rick should order to maximize his expected profits.
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