Single-Period Inventory System
A local sub shop across town makes sandwiches every morning to sell to Verizon store employees and customers at lunch time. Sandwiches are sold to customers for $2.25 and cost $0.75 to make. It costs the sub shop $0.25 per sandwich to pick up any leftover sandwiches and dispose of them after lunch time. The average daily demand is 61 sandwiches with a standard deviation of 21 sandwiches.
A) What is the target service level?
B) How many sub sandwiches should be made each day to meet this service level?