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Optimal quantity of safety stock

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Reference no: EM131344792

Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $35 for theBB-1 set (BB-1 stands for Body Beautiful Number1). The carrying cost for BB-1 is $20per set per year. To meet demand, Mr. Beautiful orders large quantities of BB-1 4times a year. The stock out cost for BB-1 is estimated to be $15per set. Over the past several years, Mr. Beautiful has observed the following demand during the lead time for BB-1: 

Demand During Lead Time

Probability

100

0.1

120

0.2

140140

0.2

160160

0.2

180180

0.2

200200

0.1

The reorder point for BB-1 is 140sets. What level of safety stock should be maintained for BB-1?

The optimal quantity of safety stock which minimizes expected total cost is? (enter your response as a whole number).

Reference no: EM131344792

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