Question

Need it done ASAP

QUESTION 23 A gourmet coffe shop in downtown San Francisco is open 200 days a year and sells an average of 75 pounds of Kona coffe beans a day. (Demand can be assumed to be distributed normally, with a standard deviation of 15 pounds per day.) After ordering (fixed cost S16 per order), beans are always shipped from Hawai within exactly 4 days. Per pound annual holding costs for the beans are $3, What is the service level in a reorder point model if the shop orders Kona coffee beans when 369.9 pounds of beans are on hand? 93.97% O 97 67% 98.93% О 99.01% О 99.51%

Answer 1

ROP = (daily demand * lead time) + z * standard deviation * sqrt(lead time)

369.9 = (75 * 4) + Z * 15 * sqrt(4)

Z = (369.69 - 300) / (15 * 2)

Z = 2.33

For z = 2.33, service level is 99.01% ( from z table)