Question: Erica has collected some pricing and cost data to help her decide how many of the Three Kings' baking dishes to order. Erica predicts total

Erica has collected some pricing and cost data to help her decide how many of the Three Kings' baking dishes to order. Erica predicts total demand for the baking dish to be normally distributed with mean of 980 and standard deviation of 354. Left over dishes will be sold to the discount chain for $15. Dishes are sold for $40 each and can be purchased for $19.80 each.

a. What is the optimal (target) service level that Erica should offer to maximize the expected profit?

b. What is the optimal order quantity that Erica should order to maximize the expected profit?

c. Suppose 1200 Three Kings' baking dishes are ordered and available for sale. What is the in-stock probability (or service level)?

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