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A cafeteria buys muffins daily. The cafeteria pays 20 cents per muffin and charges 80 cents per muffin. Unsold muffins are discarded at the end
A cafeteria buys muffins daily. The cafeteria pays 20 cents per muffin and charges 80 cents per muffin. Unsold muffins are discarded at the end of the day. Demand is approximated by a normal distribution with a mean of 40 muffins per day and a standard deviation of 5 muffins per day. Find the optimal stocking level for the muffins. What is the stockout risk for that quantity?
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