Chiles is a restaurant with a bar. One of their typical drinks has a special mix that is directly imported from the supplier. A liter of mix comes out to Chiles at $ 10. Importing the product entails fixed costs (in addition to the cost per unit) that total $ 72 per order. The time that elapses from when the order is placed until it is received is 3 weeks. During this time (5 weeks) it is estimated that an average of 25 liters are consumed with a standard deviation of 3 liters. If the product runs out, the total bona fide loss cost per liter is estimated to be $ 45. Chiles works 52 weeks a year and uses an annual interest associated with the inventory of 20%. If you need to iterate to find the optimal solution, just iterate once. Keep two significant decimal places in your statements.

Part (3.a) What is the order size and reorder point if you want to guarantee that the demand is met in 90% of the cycles?

Order Size: Answer

Reorder point:

Part (3.b) What will be the order size and reorder point if you want to minimize average costs? For this system, what would it be in type 2 service level?

Order Size:

Reorder Point:

Type 2 service level (four decimal places):