How many units of safety stock should be held

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Reference no: EM132238366

1. Piyadasa’s Fish market buys fresh Boston Tilapia daily for $5.85 per pound and sells it for $7.80 per pound. At the end of each business day, any remaining bluefish is sold to a producer of cat food for $3.50 per pound. Daily demand can be approximated by a normal distribution with a mean of 180 pounds and a standard deviation of 50 pounds. What is the optimal order quantity?

2. Consider a continuous review inventory system. Demand is normally distributed with an average of 74,000 per month and a monthly standard deviation of 2400 units. Lead time is two weeks (assume one month is four weeks). If the firm desires only an 81% cycle service level, how many units of safety stock should be held??

Reference no: EM132238366

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