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Mr. Beautiful, an organization that sells weight training sets, has an ordering cost of $40 for the BB-1 set. (BB-1 stands for Body Beautiful Number 1.) The carrying cost for BB-1 is $5 per set per year. To meet demand, Mr. Beautiful orders large quantities of BB-1 seven times a year. The stock out cost for BB-1 is estimated to be $50 per set. Over the past several years, Mr. Beautiful has observed the following demand during the lead time for BB-1:

Demand During Lead Time	Probability
40	.1
50	.2
60	.2
70	.2
80	.2
90	.1
	1.0

The reorder point for BB-1 is 60 sets. What level of safety stock should be maintained for BB-1?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92169240

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