Question: Determining Optimum Service Levels ( Cont ' d ) Sales response rate is 0 . 1 % change in revenue for a 1 % change

Determining Optimum Service Levels (Cont'd)
Sales response rate is 0.1% change in revenue for a 1% change in the service level (fill rate). Trading margin is $4 per item, inventory carrying cost is 24% per year, annual sales through the warehouse is 100,000 items. Cost of each item is $30, demand standard deviation is 690 items for a week, and the lead time is 3 weeks. Given the above data for a particular product calculate
a)z
b) Optimal CSL
 Determining Optimum Service Levels (Cont'd) Sales response rate is 0.1% change

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