Question

Below is a table of their sales

Boxs	week
11	1
12	2
3	3
5	4
8	5
7	6
4	7
6	8
10	9
15	10
17	11
20	12
25	13
30	14
25	15

Unfortunately, every week, the company ran out of boxes and estimate typical lost sales of 10 to 50 percent of boxes sold. As they make $100 per box, this is a

considerable inconvenience. They are studying what to recommend as an inventory level for next year. Explain your recommendation and what makes it

acceptable.

Answer 1

First of all, we will find the number of box with 10% and 50% increase. Post that we will find the mean of both increase. Highest mean value will be the desired level of inventory to minimize the loss.

Below will be calculation -

Boxs	week	Box With 10% Increase	Box With 50% Increase
11	1	12.1	16.5
12	2	13.2	18
3	3	3.3	4.5
5	4	5.5	7.5
8	5	8.8	12
7	6	7.7	10.5
4	7	4.4	6
6	8	6.6	9
10	9	11	15
15	10	16.5	22.5
17	11	18.7	25.5
20	12	22	30
25	13	27.5	37.5
30	14	33	45
25	15	27.5	37.5

Mean with Actual number of Boxes = 13.2

Mean with 10% increase = 14.52

Mean With 50% increase = 19.8

Hence, inventory level should be of 20 boxes to minimize the loss.