Question: Gentle Ben s Bar and Restaurant uses 5 000 quart bottles of

Gentle Ben’s Bar and Restaurant uses 5,000 quart bottles of an imported wine each year. The effervescent wine costs $ 3 per bottle and is served only in whole bottles because it loses its bubbles quickly. Ben Figures that it costs $ 10 each time an order is placed and holding costs are 20 percent of the purchase price. It takes three weeks for an order to arrive. Weekly demand is 100 bottles ( closed two weeks per year) with a standard deviation of 30 bottles. Ben would like to use an inventory system that minimizes inventory cost and will pro-vide a 95 percent service probability.
a. What is the economic quantity for Ben to order?
b. At what inventory level should he place an order?

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  • CreatedApril 09, 2014
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