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Question 12.SP.6: Children’s art sets are ordered once each year by Ashok Kuma...

Children’s art sets are ordered once each year by Ashok Kumar, Inc., and the reorder point, without safety stock (dL), is 100 art sets. Inventory carrying cost is $10 per set per year, and the cost of a stockout is $50 per set per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?

DEMAND DURING LEAD TIME PROBABILITY
0 .1
50 .2
ROP → 100 .4
150 .2
200 .1
1.0
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