Question: a. What is the recommended order quantity? b. What is the probability that at least some customers will ask to purchase the product after the

a. What is the recommended order quantity?

b. What is the probability that at least some customers will ask to purchase the product after the outlet is sold out? That is, what is the probability of a stock-out, using your order quantity in part (a)?

c. To keep customers happy and returning to the store later, the owner feels that stock- outs should be avoided if at all possible. What is your recommended order quantity if the owner is willing to tolerate a 0.15 probability of a stock-out?

d. Using your answer to part (c), what is the goodwill cost you are assigning to a stock-out?

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