Question: QUESTION 7- 15 MARKS Cocoa beans is shipped from the Ivory Coast in Africa to a chocolate manufacturer in Canada once a year. The reorder

QUESTION 7- 15 MARKS Cocoa beans is shipped from
QUESTION 7- 15 MARKS Cocoa beans is shipped from the Ivory Coast in Africa to a chocolate manufacturer in Canada once a year. The reorder point, without safety stock, is 250 kilos. The carrying cost is $20 per kilo per year, and the cost of a stock-out is $80 per kilo per year. Given the following demand probabilities during the lead time, how much safety stock should be carried? Demand during lead time (kilos) Probability 0 0.1 150 0.1 250 0.2 350 0.4 450 0.2 Given the above demand probabilities during lead time: i. how much safety stock should be carried? (10 marks) ii. Hence state the new Reorder point marks) (5

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