4. In many respects, the food inventory decision for each Celebrity cruise matches the single-period inventory model described in this chapter. Consider the decision about chicken. Suppose that Celebrity purchases chicken in bulk for $0.80 per pound, and any chicken left over after a cruise is donated to local food banks. Management estimates that a shortage penalty of $1.00 per pound is incurred due to lost customer goodwill from unsatisfied demand. If chicken demand for a 7-day cruise is normally distributed with a mean of 3,000 pounds and a standard deviation of 200 pounds, how many pounds should be brought onto the ship?

Sandwiched between mass-market cruise line players such as Carnival and Disney, and luxury cruise lines such as Crystal Cruises, Celebrity is making a name for itself in the “premium”
market, offering both an upscale experience and premium meals at “an intelligent price.”
Among the many features and services of a premium cruise line is food quality. It is critical to the success of the cruise experience and the number-one reason customers return. Dining facilities must be managed to achieve the highest possible standards.
Celebrity operates a variety of specialty restaurants in addition to the main buffet and dining rooms. The restaurants serve 3 meals a day, handling as many as 2,500 guests at dinner alone.

A Celebrity ship is “like a small upscale city that moves all the time,” says Associate VP for Supply Chain Management and Sourcing, Paul Litvinov. Tens of thousands of different items (SKUs) are stocked for each sailing of ships all over the world, but crews have only 8 hours to provision them during the period when disembarking passengers leave (usually 7–9 a.m.) and embarking passengers board (3–5 p.m.).

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TYPICAL 7-DAY CRUISE FOOD INVENTORY ITEM CONSUMED Beef Chicken AMOUNT 9,250 pounds 3,000 pounds Fresh vegetables Rice Cereal Jelly Cookies Ice cream Coffee Bottles of champagne Bottles of vodka Cans/bottles of beer Bottles of wine Source: Celebrity Cruises. 26,000 pounds 2,250 pounds 500 pounds 300 pounds 1,450 pounds 600 gallons 1,000 pounds 150 250 9,900 2,600