Red Lip Cherry (RLC) is a local retailer of cherries. During the cherry seasons, daily demand follows a normal distribution with a mean of 100 pounds and a standard deviation of 10 pounds. RLC purchases its cherries from a local orchard for $12 per pound and sells them for $20 per pound. At the end of business day, any remaining cherries will be sold to a producer of cherry juice for $10 per pound.
What is the optimal service level to set?
What is the optimal ordering quantity (corresponding to the optimal service level in Q29)?
