The way the answer changes for the optimal ordering policy when the store needs to satisfy a 95% service level of the meeting the customer demands on time. Also, identify the penalty cost ‘p’ to which the service level requirement is equal to. Inventory and supply chain models: The functions of inventory and supply chain are one of the most important business decision areas for an organization. The first important aspect of these concepts is to have adequate inventory on hand. The second important aspect is to carry a little amount of inventory as possible.

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Chapter 12, Problem 45P

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To show: The way the answer changes for the optimal ordering policy when the store needs to satisfy a 95% service level of the meeting the customer demands on time. Also, identify the penalty cost ‘p’ to which the service level requirement is equal to.

Inventory and supply chain models:

The functions of inventory and supply chain are one of the most important business decision areas for an organization. The first important aspect of these concepts is to have adequate inventory on hand. The second important aspect is to carry a little amount of inventory as possible.

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