What stocking level is appropriate to achieve, Other Subject

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What stocking level is appropriate to achieve

Problem: Demand for devil's food whipped-cream layer cake at a local pastry shop can be approximated using a Poisson distribution with a mean of 5.6 per day. The manager estimates it costs $23 to prepare each cake. Fresh cakes sell for $26. Day-old cakes sell for $23 each. Use Table C.

1. Assume one-half of the day-old cakes are sold, and the rest thrown out. What service level is achieved in this situation? (Round your answer to 2 decimal places.)

2. What stocking level is appropriate to achieve this service level?

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