Question
Elyssa's Elegant Eveningwear (EEE) needs to ship finished goods from its manufacturing facility to its distribution warehouse. The daily demand from the distribution warehouse is
Elyssa's Elegant Eveningwear (EEE) needs to ship finished goods from its manufacturing facility to its distribution warehouse. The daily demand from the distribution warehouse is normally distributed with mean 1200 gowns, and standard deviation 300 gowns. It costs the distribution warehouse $0.5 for holding one gown for one day.
EEE set the critical ratio at 95%.
EEE uses a premium parcel service for the gown delivery, which requires an effective lead time of 5 days, i.e., L+1 = 5 days, and a $200 fixed shipment cost.
If EEE raises the critical ratio from 95% to 99%, how much MORE safety stock should be held?
Report the ADDITIONAL amount of safety stock.
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