A restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00 per bottle and is served only in whole bottles because its taste quickly deteriorates. The restaurant figures that it costs $10.00 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The restaurant operates 50 weeks per year. The restaurant would like to use an inventory system that minimizes inventory cost. The restaurant has figured that the most economical order size or EOQ is approx. 409 (rounding up the decimals). Suppose that things have become uncertain and that customer demand is no more constant. Customer demand is now normally distributed with mean being the same as given in the problem description and standard deviation = 30 units per week. The supply source is still very reliable and as a result the lead time is constant. Find out the safety stock needed to achieve 95% customer service level. O 55 65 075 85 None of the above

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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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 restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00
per bottle and is served only in whole bottles because its taste quickly deteriorates. The
restaurant figures that it costs $10.00 each time an order is placed, and holding costs
are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The
restaurant operates 50 weeks per year. The restaurant would like to use an inventory
system that minimizes inventory cost. The restaurant has figured that the most
economical order size or EOQ is approx. 409 (rounding up the decimals).
Suppose that things have become uncertain and that customer demand is no more
constant. Customer demand is now normally distributed with mean being the same as
given in the problem description and standard deviation = 30 units per week. The
supply source is still very reliable and as a result the lead time is constant. Find out the
safety stock needed to achieve 95% customer service level.
O 55
65
075
85
None of the above
Transcribed Image Text:A restaurant uses 5,000 quart bottles of ketchup each year. The ketchup costs $3.00 per bottle and is served only in whole bottles because its taste quickly deteriorates. The restaurant figures that it costs $10.00 each time an order is placed, and holding costs are 20 percent of the purchase price. It takes 3 weeks for an order to arrive. The restaurant operates 50 weeks per year. The restaurant would like to use an inventory system that minimizes inventory cost. The restaurant has figured that the most economical order size or EOQ is approx. 409 (rounding up the decimals). Suppose that things have become uncertain and that customer demand is no more constant. Customer demand is now normally distributed with mean being the same as given in the problem description and standard deviation = 30 units per week. The supply source is still very reliable and as a result the lead time is constant. Find out the safety stock needed to achieve 95% customer service level. O 55 65 075 85 None of the above
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