Question: Problem 1 . Fresh connection ( a a fruit juices producer ) holds inventory of one of its product: Fressie Orange 1 liter in its

Problem 1. Fresh connection (a a fruit juices producer) holds inventory of one of its
product: Fressie Orange 1 liter in its warehouse. The current service level is set at 90%.
The warehouse replenished retail stores on a weekly basis so that the customer service
level could be defined as the probability of being in stock during the warehouse
replenishment lead time. The company wonders if this service level (90%) is proper. At
current service level, for each 1 percent service level increase (or decrease), the sales
department estimates that it can increase (or decrease) sales by about 0.15%. The trading
margin (markup) is $2 per bottle with annual sales through the warehouse of 104,000
bottles. The standard cost per bottle was $3 and the annual inventory carrying cost was
estimated at 30%. The replenishment lead time is one week, with average weekly sales of
about 2000 bottles and a standard deviation of 500 bottles (weekly).
If the company decides to increase the service level by 1%, what is the change of z-score (please only fill in the number, include "-" sign if negative)(keep 4 decimal places)?
If the company decides to increase the service level by 1%, what is the change of inventory cost (only fill in the number, include "-" sign if negative)
How much will the profit changes if this company decides to increase the service level by 1%(please ONLY fill in the number include - sign of if it is negative)
 Problem 1. Fresh connection (a a fruit juices producer) holds inventory

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