Question
Puppy Food Inc. (PFI) sells a very popular blend of dog food. Demand for the dog food has a Normal distribution with a mean 220
Puppy Food Inc. (PFI) sells a very popular blend of dog food. Demand for the dog food has a Normal distribution with a mean 220 bags per week and a standard deviation of 30 bags per week.
PFI orders the dog food from Nutritious & Delicious Co.. The lead time L = 1 week. The effective lead time L+1 = 2 weeks. The shipping from Nutrition & Delicious Co. to PFI is free, there is no fixed ordering cost.
The holding cost of the dog food is $0.75/bag/week. If a customer experiences stock out of the dog food in store, PFI offers to deliver the dog food to the customer's home using free expedite shipping. This expedite shipping arrangement costs PFI $20/bag/week, which is considered as the unit backorder cost.
a.
PFI should use % as the critical ratio for the dog food.
Round off you answer to the FIRST decimal point.
b.
How may bags of dog food should be held as safety stock (Round your answer to the nearest INTEGER)
Note: you can calculate the z value using Excel.
c. PFI should use S = bags as the order-up-to level for the dog food. (Round your answer to the nearest integer)
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