Charlie\'s Pizza orders all of its pepperoni, olives, anchovies, and mozzarella
ID: 463655 • Letter: C
Question
Charlie's Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every four weeks to take orders. Because the orders are shipped directly from Italy, they take three weeks to arrive. Charlie's Pizza uses an average of 140 pounds of pepperoni each week, with a standard deviation of 16 pounds. Charlie's prides itself on offering only the best-quality ingredients and a high level of service, so it wants to ensure a 99 percent probability of not stocking out on pepperoni. Assume that the sales representative just walked in the door and there are currently 460 pounds of pepperoni in the walk-in cooler. How many pounds of pepperoni would you order? (Round your answer to the nearest whole number.) Amount of pepperoni's ordered pounds
Explanation / Answer
Lead time, L = 3 weeks
Average weekly demand, d= 140 pounds
Lead time = 4 weeks
Std Dev, = 16 pounds
Service level = 99%
Inventory on hand = 460 pounds
= SQRT{(4+3) x (16 x 16)} = 42.33
Order Quantity = {(L+T) x d)) +(Z x ) – inventory on hand}
= {(3+4) x 140)) +(2.57 x 42.33) – 460} = 629 pounds