How much safety stock should be carried

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Reference no: EM131356370

Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz's chain of retail stores, called The Kathmandu Shop, once a year. The reorder point, without safety stock, is 200 chairs. Carrying cost is $30 per unit per year, and the cost of a stock out is $70 per chair per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

Demand During Lead Time	Probability
0	0.2
100	0.2
200	0.2
300	0.2
400	0.2

Reference no: EM131356370

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