What is the new overstocking cost what is the optimal


Skinner’s Fish Market buys fresh Boston bluefish daily for $4.2 per pound and sells it for $6.7 per pound. At the end of each business, any remaining bluefish is sold to a producer of cat food for $2.4 pound. Daily demand can be approximately by a normal distribution with a mean of 80 pounds and a standard deviation of 10 pounds. a. What is the understocking cost? b. What is the overstocking cost? c. What is the optimal stocking level? d. If now the producer of cat food is only willing to pay $1.5 per pound and there is no other channel for getting rid of unsold bluefish, What is the new overstocking cost? What is the optimal service level? What optimal stocking should Skinner’s Fish Marketing adopt?

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