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Secure| https://newconnect.mheducation.com/flow/connect.html K Back This window shows your responses and what was marked correct and incorrect from your previous attempt Problem 13-39 24 Burger Prince buys top-grade ground beef for $1.00 per pound. A large sign over the entrance guarantees that the meat is fresh daily. Any leftover meat is sold to the local high school cafeteria for 80 cents per pound. Four hamburgers can be prepared from each pound of meat. Burgers sell for 60 cents each. Labor, overhead, meat, buns, and condiments cost 50 cents per burger. Demand is normally distributed with a 0/2.25 points awardeo mean of 397 pounds per day and a standard deviation of 35 pounds per day. What daily order quantity is optimal? (Hint: Shortage cost must be in dollars per pound.) (Round your answer to 1 decimal place.) 15350 Use Table ScoredOptimal daily order quantity 4226 Ob. Scored

Explanation / Answer

solution=

the cost of underestimating the demand is Cu and cost of overestimating demand is Co
Cu= ($0.60 - $0.50)*4 = $0.40
Co=$1 - $0.80 = $0.20

service level =Cu/(Cu+Co)
       =0.40/(0.40+0.20)
       = 0.6667

z value at above service level = 0.430727

optimal order quantity = mean + Z value *std deviation
                                             =397 + 35 * 0.430727
                                             =412.075
                                            = 412.1

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