Question: Childrens art sets are ordered once each year by Vicki Smith, Inc., and the reorder point, without safety stock (dL), is 100 art sets. Inventory

  1. Childrens art sets are ordered once each year by Vicki Smith, Inc., and the reorder point, without safety stock (dL), is 100 art sets. Inventory carrying cost is $10 per set per year, and the cost of a stockout is $50 per set per year. Given the following demand probabilities during the reorder period, how much safety stock should be carried?

    Demand During reorder period

    Probability

    0

    .1

    50

    .2

    100

    .4

    150

    .2

    200

    .1

    1.0

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