He Fashion Store sells fashion items. The demand for one selling season is random and unknown.
The store must order inventory many months in advance of the selling season to get a good price on the items and to ensure they arrive right before the selling season. Each unit costs Fashion $100.
These units are sold to customers for $250 per unit. Items not sold during the season can be sold to the outlet store at $80 per unit.

a. Based on the information above, is the optimal service level more or less than 50%? Provide your answer with a justification.

b. If the demand of the fashion items follows a normal distribution, then should the optimal order quantity be more or less than the mean of the demand of the fashion items? Provide your answer with a justification

Answer rating: 100% (QA)

Optimal Service Level a The optimal service level for He Fashion Store is likely to be less than 50 Justification High holding costs Holding unsold in... View the full answer