Question

A sushi place in the food court is trying to determine how many bento boxes to make everyday. The price of a box is $12. The cost of making one box is $8. In the end of the day, any unsold boxes will be thrown away with no salvage value. Customer demand during the day is random and follows a certain probability distribution. What is the probability of stockout if the optimal order quantity is used?

Note 1: Keep 2 decimal places for your answer.

Note 2: Provide your answer as a number between 0 and 1. For example, if the probability is 0.1253, enter 0.13.

Answer 1

We find the solution as shown below:

As seen from above, the service level = 0.33

Hence, probability of stock-out = 1 - Service level = 0.67

The above in form of formulas is shown below for better understanding and reference:

To simplfiy,

Service level =

Hence,

Answer = 0.67

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