Henrique correa's bakery prepares all its cakes between 4 a. m. and 6 a. m.so they will be fresh when customers arrive. day-old cakes are virtually always sold, but at a 50% discount off the regular $10 price. the cost of baking a cake is $7, and demand is estimated to be normally distributed, with a mean of 25 and a standard deviation of 8. what is the optimal stocking level? refer to the standard normal table for z-values. the optimal stocking level for the bakery is cakes (round your response to the nearest whole number).

The optimal stocking level for the bakery is cakes 27.

Explanation:

Cost c = $ 7

Selling price p = $ 10

salvage value s = $ 5

Mean = 25

Standard deviation \sigma = 8

Cu = underage cost

    = p-c

    = $10 - $7

    = $3

Co = overage cost

     = c-s

     = $7 - $5

     = $2

P\leq C_{u}/(C_{u}+C_{o})

P\leq3/(3+2)

= 0.6

By using normsinv() function in excel we to find the correct critical value

The Z value for the probability 0.6 is 0.2533

The optimal stocking level is

=\mu +z\sigma

= 25 + 0.2533 *8

= 27.02

The optimal stocking level of bakery is 27.02

Therefore, The optimal stocking level for the bakery is cakes 27.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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