Question: The class sets are ordered once each year by Kumon, and the reorder point, without safety stock (dL), is 100 art sets. Inventory carrying cost

The class sets are ordered once each year by Kumon, and the reorder point, without safety stock (dL), is 100 art sets. Inventory carrying cost is $10 per set per year, and the cost of a stockout is $50 per set per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

Demand During Lean Time Probability Safety Stock Stock-out Cost Additional Holding Cost Total Cost
0 0.1
50 0.2
ROP 100 0.4
150 0.2
200 0.1

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