Whenever I visit Spinneys there is a table full of discounted items that are near their expiration date. They often have bottles of ketchup on this table.

Let's assume that it costs the Spinneys $1.5 for each bottle of ketchup they buy from their distributor. When purchased in advance of the expiration date, the customer pays $4.50 for a bottle of ketchup. Any ketchup sold on the discount table near the expiration date is sold for $1.25. 7) If the Spinneys would like to have an optimal service level of 97.5%, what should the cost of excess be provided that the cost of shortage remains the same? Round to two decimals.

8) What would the new price be for the discounted bottle of ketchup be if the distributor's price remains at $1.50 and the Spinneys wants a service level of 97.5%? Round to two decimals.

9) How much of a discount does this new price represent relative to the regular price of $4.50? Round to two decimals.

10) In your opinion, what discount price should the Spinneys use -- $1.50 or the price found in part 8?