Salvage value for this inventory management system

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1. Given the following information, compute the implied salvage value for this inventory management system: Demand follows normal distribution with a mean of 400 units and a standard deviation of 50 units. The target stocking point is 498 units. The sales price per unit is $1.5 dollars and the cost of goods sold per unit is 72 cents.

2. Milk is stocked at the grocery store each week. At the end of the week unsold milk is reduced in price by 60% and always sells for this lower price instantly. If weekly demand for milk is normally distributed with a mean of 300 gallons and standard deviation of 45 gallons, find the price for which a fresh gallon of milk sells. Assume a service level of 97.5% and that the store purchases milk for $2.44 per gallon.

Reference no: EM132267570

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