Organization that sells weight training sets

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Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $35 for the BB-1 set (BB-1 stands for Body Beautiful Number 1). The carrying cost for BB-1 is $18 per set per year. To meet demand, Mr. Beautiful orders large quantities of BB-1 4 times a year. The stockout cost for BB-1 is estimated to be $15 per set. Over the past several years, Mr. Beautiful has observed the following demand during the lead time for BB-1: Demand During Lead Time 40 60 80 100 120 140 Probability 0.1 0.2 0.2 0.2 0.2 0.1 The reorder point for BB-1 is 80 sets. What level of safety stock should be maintained for BB-1? The optimal quantity of safety stock which minimizes expected total cost is?

Reference no: EM131228711

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