The annual demand for sugar at a local soft drink company is normally distributed with a mean of 800 tons and a standard deviation of 25 tons. The sugar sells for $500 each ton, and the annual inventory holding cost rate is 10%. Ordering costs are $5 per order. The delivery time for sugar is 5 working days. Assume that there are 250 working days in a year.
1.Determine the optimal order quantity.
2.What size of safety stock should the company keep at a service-level of 90%?
3.Suppose they keep 8 extra tons in inventory as a safety stock. What is the service-level
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