Discuss the below:
Q: Jack's Pizza Parlor uses 1,000 large cans of tomatoes a month, at an average rate of 40 per day for each of the 25 days per month the parlor is open. Usage can be approximately by a normal distribution with a standard deviation of 3 cans per day. Lead time is constant at 4 days (they really have a reliable supplier). Monthly carrying costs are $0.02 per can and ordering costs are $2.
a. Determine the economic order quantity (EOQ.)
b. For a service level of 99 percent, how many cans of tomatoes should Jack have on hand when he orders?
Consumption of Mug Beer at a local tavern is known to be normally distributed with a mean of 150 bottles per day and a standard deviation of 10 bottles per day. Delivery time is also normally distributed with a mean of six days and a standard deviation of one day. How many bottles of Mug should be on hand at re-order time in order to be 90 percent sure of not running out before delivery arrives?