Computing Inventory Management Parameter Values

Directions

Please calculate the following values. You may use the Hints at the end of this exercise, and you may

use the Notes pages at the back of this exercise for your calculations.

Best Service Level at each Just Baked store.

a$.$ Cost of Understocking $C_u.$ Compute the understocking cost $C_u$ for franchisees and for company$-$

owned stores.

b$.$ Cost of Overstocking $C_0.$ Compute the overstocking $cost{C}_0$ for franchisees and for company$-$

owned stores.

c$.$ Franchisee Best Service Level Computation. Compute the Best Service Level SL$*$ for cupcake

stocking at franchisee stores.