What would you recommend as an eoq

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Reference no: EM131177650

Deep Six Seafood, a restaurant that is open 360 days a year, specializes in fresh Maine lobsters at a cost of $10 each. Air freight charges have increased significantly, and it now costs Deep Six $48 to place an order. Because the lobsters are shipped live in a saltwater tub, the order cost is not affected by order sizes.The cost to keep a lobster alive until needed runs about $0.02 per day.

The demand for lobsters during the 1-day lead time is as follows:

Lead-Time Demand

Probability

0

.05

1

.10

2

.20

3

.30

4

.20

5

.10

6

.05

a. Deep Six would like to reconsider its order size. What would you recommend as an EOQ ?

b. The Maine distributor is willing to give Deep Six a $0.50 discount on each lobster if orders are placed in lots of 360 each. Should Deep Six accept this offer?

c. If Deep Six insists on maintaining a safety stock of 2 lobsters, what is the service level?

Reference no: EM131177650

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