Mama Mia’s Pizza purchases its pizza delivery boxes from a printing supplier. MamaMia’s delivers on average 200 pizzas a month. Boxes cost 20 cents each, and each order costs $10 to process. Because of limited storage space, the manager wants to charge inventory holding at 30% of the cost. The lead time is one week, and the restaurant is open 360 days per year. Determine the following:

1)economic order quantity

2)the reorder point

3)the number of order per year

4)the time between orders

5)the total annual cost

Suppose the manager of MamaMia’s takes demand variability into account. She estimates that the standard deviation of monthly demand is 20. What is the safety stock level and the optimal reorder point policy?Assume service level desired is 95%.

Dan’s Independent Book Store is
trying to decide on how many copies of a book to purchase at the start of the
upcoming selling season. The book retails at $28.00. The publisher sells the
book to Dan at $20.00. Dan will dispose of all of the unsold copies of the book
at 50% off the retail price, at the end of the season. Dan estimates that
demand for this book during the season is Normal with a mean of 1000 and a
standard deviation of 250. How many copies should Dan order so as to maximize
expected profit?

The
Friday 5pm flight from Washington to Chicago has 250 seats. The airline offers
a high and low fare. There is ample demand for the low fare. Demand for the
high fare is normally distributed with a mean of 100 and a standard deviation
of 40. The high fare is $700 and the low fare is $450. Since the low fare
customers (i.e., tourists) buy in advance of high fare customers (business
persons, who often make travel plans a day or two before the flight) and have
ample demand, the airline reserves some seats for the more profitable high fare
customers in order to prevent all seats being booked by low fare customers. How
many seats should the airline reserve for high fare customers? For instance,
suppose the airline reserves 100 seats for high fare customers. Then, it will sell 150 seats to low fare
customers (remember, there is ample demand for low fare seats). But because of
the variable demand for high fare customers, there is some uncertainty as to
whether the airline can sell all the 100 reserved seats to high fare customers.
If it cannot, then these seats go empty and the airline cannot sell them back
to low fare customers (because by that time, it is very close to the departure
time).