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Bobbi's Restaurant in Clear Water Bay is a popular place for brunch. The restaurant serves real maple syrup with American toast and pancakes. Bobbi
Bobbi's Restaurant in Clear Water Bay is a popular place for brunch. The restaurant serves real maple syrup with American toast and pancakes. Bobbi buys the maple syrup from a company in Sai Kung that requires 3 days for delivery. The syrup costs Bobbi $4 a bottle and may be purchased in any quantity. Fixed costs of ordering amount to about $50 for bookkeeping expenses, and holding costs are based on a 2 percent monthly rate. Based on past experience, the daily demand for the syrup is normal with mean 10 and variance 8 (in bottles). For the purposes of your calculations, you may assume that there are 30 days in a month and that all excess demand is back-ordered. Bobbi adopts a continuous review policy and expects the cycle service level to be 90 percent.
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