Ah Seng Fish Company buys fresh snapper (a family of perciforrn fish) daily from the fish farm near Pulau Ubin. Snapper are purchased for $2.50 per kg and sold to the public at $8.50 per kg. The snapper are kept fresh by displaying them on ice but at the end of the day.
Any unsold fish have a noticeable odor and are sold to a nearby fish ball store for $1 per kg. The past year's demand for snapper on Saturdays is shown in the table. Based on this information.
a. What should their target service level and stocking point be?
b. What is the significance of the target stocking level?
|
Daily Demand (kg)
|
# Days at This Level
|
|
300
|
3
|
|
320
|
4
|
|
340
|
6
|
|
360
|
9
|
|
380
|
9
|
|
400
|
8
|
|
420
|
6
|
|
440
|
5
|
|
460
|
2
|