Levels of inventory appropriate for each level of service

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A popular ice cream parlor is considering measures to increase the level of service. Demand for its ice cream can be approximated by a normal distribution with a mean of 800 gallons per period and a standard deviation of 50 gallons per period. The new management desires to increase the level of service from 90% to 95%. The additional revenue the increase would produce would be $ 150. The annual cost of carrying one gallon in inventory is $ 5. What are the levels of inventory appropriate for each level of service?

Reference no: EM131411353

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