Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 8

The concession stand at the Blacksburg High School stadium sells slices of pizza during soccer games. Concession stand sales are a primary source of revenue for high school athletic programs, so the athletic director wants to sell as much food as possible. However, any pizza not sold is given away to the players, coaches, and referees, or it is thrown away. The athletic director wants to determine a reorder point that will meet, not exceed, the demand for pizza. Pizza sales are normally distributed, with a mean of 6 pizzas per hour and a standard deviation of 2.5 pizzas. The pizzas are ordered from Pizza Town restaurant, and the mean delivery time is 30 minutes, with a standard deviation of 8 minutes.
a. Currently, the concession stand places an order when it has 1 pizza left. What level of service does this result in
b. What should the reorder point be to have a 98% service level