Question: V&A cafe started selling a popular drink that uses nonperishable coffee beans. The drink has a consistent flow of customers, but demand can fluctuate depending

V&A cafe started selling a popular drink that uses nonperishable coffee beans. The drink has a consistent flow of customers, but demand can fluctuate depending on the day. Customers are very loyal, and if V&A runs out, they are willing to wait until the next day i.e., their demands are backordered. Daily demand for the drink in terms of bags of coffee beans is distributed as N (126.5,16.42). V&A orders the coffee beans from its supplier each morning. Unused beans held overnight incur a holding cost of $0.85 per bag, and backorders incur a penalty of $4.25 per bag. (a) Calculate the optimal base-stock level. (b) Assuming V&A cafe uses the base-stock level from part (a), calculate its type-1 service level. (c) Now assume that the that the supply lead time is 2 days. Calculate the optimal base-stock level.

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