Daily demand for automotive batteries in an automobile repair shop is normally distributed with a mean of
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Daily demand for automotive batteries in an automobile repair shop is normally distributed with a mean of 10 batteries and a standard deviation of 1 battery. The cost of a dissatisfied customer, expedited ordering, and equipment downtime as a result of running out-of-stock is US$400 per battery. The purchase cost is US$250 per battery with no salvage value:
1. Determine the service level.
2. What is the optimal stocking level for the service level determined in (a)?
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Jehal Shah
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Related Book For 
Operations Management Managing Global Supply Chains
ISBN: 978-1506302935
1st edition
Authors: Ray R. Venkataraman, Jeffrey K. Pinto
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