Homework # 4: ROP and Single Period Models 1. A jewelry firm buys semiprecious stones to make bracelets and rings. It uses 80 stones a day in its process. The person who orders the stones replenishes the stock as soon as the amount on hand drops to 700 stones. The delivery time of orders is normal with an average of 6 days and a standard deviation of 1 day. Calculate the risk of a stocking out of semiprecious stones before an order arrives. reorder point Hint: Find the service level from the ROP and then find the stockout risk. 2. Skinner's Fish Market buys fresh Boston bluefish daily for $3.60 per pound and sells it for $4.70 per pound. At the end of each business day, any remaining bluefish is sold to a producer of cat food for $2.20 per pound. Daily demand can be approximated by a normal distribution with a mean of 80 pounds and a standard deviation of 10 pounds. Determine the optimal stocking level.