The Amazon Forest Restaurant stocks a red Brazilian table wine purchased from a nearby city. The daily demand for the wine at the restaurant is normally distributed with mean of 20 bottles and a standard deviation of 5 bottles. The wine merchant sends a representative to check the restaurant's wine cellar every 30 days. During a recent visit, there were 25 bottles in stock. The lead time to receive an order is 2 days. The restaurant manager has requested an order size that will enable him to limit the probability of a stock out to 2 percent.
1. What inventory model is appropriate for this model?
a. EOQ model
b. EPQ model
c. (Q,R) model with random demand
d. Periodic review model
2. How many bottles should be ordered during that particular visit?
a. 652 bottles
b. 681 bottles
c. 673 bottles
d. 662 bottles
3. What is the safety stock?
a. 66 bottles
b. 47 bottles
c. 37 bottles
d. 58 bottles