The Annie's Card Shoppe stocks Mother's Day cards for a limited time each Spring. The store charges a $7.99 for each card sold. Immediately after Mothers Day the cards are sold to a discounter for $1.00 per card.

Annie's is committed to a 95% service level on all products sold. What is the implied cost target Annie's must hit from its suppliers that justifies the 95% fill rate for the Mothers Day cards. HINT: Consider the Newsvendor model since this product is seasonal.

(please show the math used)

(step by step)

A) $3.59

B) $1.35

C) $.05

D) $.40

E) $1.95