Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz’s chain of retail stores, called The Kathmandu Shop, once a year. The reorder point, without safety stock, is 200 chairs. Carrying cost is $30 per unit per year, and the cost of a stockout is $70 per chair per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?
Demand During Lead Time Probability
0 ................... 0.2
100 ................... 0.2
200 ................... 0.2
140 ................... 0.2
100 ................... 0.2