Charle\'s Pizza orders all of its pepperoni, olives, anchovies, and mozzarella c
ID: 388092 • Letter: C
Question
Charle's Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy An American distributor stops by every fo Because the orders are shipped directly from Italy, they take three weeks to amve ur weeks to take orders Charie's Pizza uses an average of 200 pounds of pepperoni each week, with a standard deviation of 22 pounds Charle's prides itself on offering only the best-quality ingredients and a high level or service, so it wants to ensure a 95 percent probability of not stocking out on pepperoni. that the sales representative just walked in the door and there are currently 480 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni would you order? (Use Excel's NORM SINVO function to find the correct critical value for the given -level. Do not round intermediate calculations. Roun answer to the nearest whole number.) critical value for the given a-level. Do not round intermediate calculations. Round z value to 2 decimal places and final nds Amount of pepperoni's orderedExplanation / Answer
Review period for taking order = 4 weeks
Lead time of delivery from Italy = 3 weeks
Protection interval = Review period + Lead time = 4 + 3 = 7 weeks
Weekly standard deviation of demand = 22 Pounds
Therefore, standard deviation of demand during protection period
= 22 ponds x Square root ( Protection period )
= 22 x square root ( 7 )
= 22 x 2.645
Instock probability = 95 percent
Corresponding Z value = NORMSINV ( 0.95 ) = 1.6448
Therefore,
Required safety stock = Z value x standard deviation of demand during protection period = 1.6448 x 58.19 = 95.71
Reorder point
= Average weekly demand x Protection period ( weeks ) + Safety stock
= 200 x 7 + 95.71
= 1400 + 95.71
= 1495.71
Amount of pepperonis ordered = 1495.71 Pounds
Amount of pepperonis ordered = 1495.71 Pounds