Bobbi's Restaurant in Boise, Idaho, is a popular place for weekend brunch. The restaurant serves real maple syrup with french toast and pancakes. Bobbi buys the maple syrup from a company in Maine that requires three weeks for delivery. The syrup costs Bobbi S4 a bottle and may be purchased in any quantity. Fixed costs of ordering amount to about $75 for bookkeeping expenses, and holding costs are based on a 20 percent annual rate. Bobbi estimates that the loss of customer good- will for not being able to serve the syrup when requested amounts to $25. Based on past experience, the weekly demand for the syrup is normal with mean 12 and vari- ance 16 (in bottles). For the purposes of your calculations, you may assume that there are 52 weeks in a year and that all excess demand is back-ordered. Consider Question 20, page 282 of the text (Bobbi's Restaurant...). Assume that we don't want to use the $25 shortage cost mentioned because we don't trust this value. a) Suppose Bobbi orders in batches of Q=345 bottles any time the inventory hits a value of R=51 bottles. What are the expected total annual costs for this policy? b) What are the Type 1 and Type 2 service levels that this policy provides? c) What is the imputed shortage cost of this policy? If the actual shortage cost was $30 per bottle short would you increase or decrease the value of R? Explain your answer. d) If a Type 1 service level of 95% is desired, what should R and Q be? e) If a Type 2 service level of 95% is desired, what should R and Q be? f) Suppose Bobbi's supplier requires a minimum order size of 500 bottles. Find the reorder point that Bobbi should use if she wishes to satisfy 99% of her customer demand for the syrup. Bobbi's Restaurant in Boise, Idaho, is a popular place for weekend brunch. The restaurant serves real maple syrup with french toast and pancakes. Bobbi buys the maple syrup from a company in Maine that requires three weeks for delivery. The syrup costs Bobbi S4 a bottle and may be purchased in any quantity. Fixed costs of ordering amount to about $75 for bookkeeping expenses, and holding costs are based on a 20 percent annual rate. Bobbi estimates that the loss of customer good- will for not being able to serve the syrup when requested amounts to $25. Based on past experience, the weekly demand for the syrup is normal with mean 12 and vari- ance 16 (in bottles). For the purposes of your calculations, you may assume that there are 52 weeks in a year and that all excess demand is back-ordered. Consider Question 20, page 282 of the text (Bobbi's Restaurant...). Assume that we don't want to use the $25 shortage cost mentioned because we don't trust this value. a) Suppose Bobbi orders in batches of Q=345 bottles any time the inventory hits a value of R=51 bottles. What are the expected total annual costs for this policy? b) What are the Type 1 and Type 2 service levels that this policy provides? c) What is the imputed shortage cost of this policy? If the actual shortage cost was $30 per bottle short would you increase or decrease the value of R? Explain your answer. d) If a Type 1 service level of 95% is desired, what should R and Q be? e) If a Type 2 service level of 95% is desired, what should R and Q be? f) Suppose Bobbi's supplier requires a minimum order size of 500 bottles. Find the reorder point that Bobbi should use if she wishes to satisfy 99% of her customer demand for the syrup
