Authentic Thai rattan chairs (shown in the photo) are delivered to Gary Schwartz's chain of retail stores, called The Kathmandu Shop, once a year. The reorder point, without safety stock, is 200 chairs. Carrying cost is $30 per unit per year, and the cost of a stock out is $70 per chair per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?
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Demand During Lead Time
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Probability
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0
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0.2
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100
|
0.2
|
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200
|
0.2
|
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300
|
0.2
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400
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0.2
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