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T he owner of a bakery caf makes sure that all products are made in the morning just before the store opens every day so
The owner of a bakery caf makes sure that all products are made in the morning just before the store opens every day so they will be fresh when sold. To live up to its reputation, any unsold boxes will be discarded at the end of the day. A box of the cafs most popular product sells for $20. The cost of making one box is $4 and demand is estimated to be normally distributed with a mean of 65 and a standard deviation of 10. Suppose the caf uses an inventory model to determine its optimal stocking level for this product, and you observe that it always makes 74boxes of the most popular product every morning. What can be said about the goodwill cost?
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