Question
The local supermarket buys lettuce each day to ensure really fresh produce. Each morning any lettuce that is left from the previous day is sold
The local supermarket buys lettuce each day to ensure really fresh produce. Each morning any lettuce that is left from the previous day is sold to a dealer that it resells to farmers who use it to feed their animals. This week the supermarket can buy fresh lettuce for $4.00 a box. The lettuce is sold for $10.00 a box and the dealer that sells old lettuce is willing to pay $1.50 a box. Past history says that tomorrows demand for lettuce averages 250 boxes with a standard deviation of 34 boxes. How many boxes of lettuce should the supermarket purchase tomorrow? (Assume that the demand is normally distributed.)
- Start with identification of Cu and Co IN THE CONTEXT OF THE PROBLEM. Clearly explain how the Cu and Co numbers are chosen.
- Compute the service level based on Cu and Co
- Identify the mean, standard deviation; compute z and the perfect order
- Offer a pictorial view of the distribution, the perfect order point, and the service level on the side, so that it is easy to understand.
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