Question
A hockey team consumes on average 600 bottles of a sports-focused beverage per week. Each bottle costs $7.50 to purchase, with the holding costs accounting
A hockey team consumes on average 600 bottles of a sports-focused beverage per week. Each bottle costs $7.50 to purchase, with the holding costs accounting for 20% of the purchase cost. The cost of placing a new order is $50, which arrives within half a week. The team works for 40 weeks (continuously) in a year. During each week, the consumption of bottles follows a normal distribution with a standard deviation of 50 bottles. Suppose the beverage inventory is replenished according to a continuous-review system.
What should be the reorder point to guarantee a service level of 95%.
A) 300 B) 358 C) 600 D) None of the above
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