What the cost per unit of demand underestimated

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The local team is having a major game this Sunday evening. You are in charge of the stadium cafeteria and you will need to decide about the number of sandwiches you will prepare for sales.

The cost of a sandwich is $3.5. The selling price during the sandwich is $6. After the game is over, you will throw all the unsold sandwiches, as they have no value. We expect number of sandwich sold is normally distributed with an expected demand (mean) of 1,000 units and a standard deviation of 150 units.

What’ the cost per unit of demand overestimated (Co)

What’ the cost per unit of demand underestimated (Cu)

What is the optimal service level that will balance the cost of understocking and overstocking?

How many sandwiches should you prepare for the game?

Reference no: EM132238352

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