Supreme Cola is a supplier of fountain equipment to restaurants, bars and cafeterias. The fountain equipment is manufactured at their York PA plant site. A national distribution center (DC) for the fountain equipment is also maintained adjacent to the plant. Supreme has one common platform design to which they add various features and accessories to create 10 different product options.

The company is interested in using the Order-up-to approach at their DC. Depending upon the length of the review interval, the company is considering three alternatives:

1. Alternative 1: L=4; demand is normally distributed with mean = 100 units and std. dev. = 40 units.
2. Alternative 2:L=2; demand is normally distributed with mean = 200 units, and std dev. = 56 units.
3. Alternative 3: L=1; demand is normally distributed with mean = 400 units, and std. dev. = 75 units.

Answer the following questions.

i. For each alternative, determine the optimal order-up-to level (S*) as to achieve:

• an In-stock probability of 98%.
• a Fill rate of 96%.

ii. For an in-stock probability target of 97%, determine the alternative which will minimize on-hand inventory. iii. For a fill rate target of 98%, determine the alternative which will minimize the expected on-hand inventory.

Present your results in summary format in the following table making sure to show all calculations leading to the final answer.

Alt.	S* for In-stock Prob = 98%	S* for Fill Rate = 96%	Exp on-hand Inventory for In-stock Probability =97%	Exp. On-hand inventory for FR=98%
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