Single-Period Inventory System
The restaurant you are working at makes one massive batch of ravioli each day. If you run out before the end of the day, the last few customers are less than satisfied, but if you make too much, it can be sold to the local hog farmer for feed. Every serving costs $0.93 to make and can be sold for $8.00 to customers. You have to pay $0.10 per serving to transport the extra servings to the hog farmer, but the hog farmer will pay you $0.48 per serving. The average daily demand is 82 servings with a standard deviation of 26 servings.
a- What is the target service level?
b- How many servings of ravioli should your restaurant make each day to meet this service level?