Tobacco is shipped from North Carolina to a cigarette manufacturer in Cambodia once a year. The reorder point, without safety stock, is 200 kilos. The carrying cost is $15 per kilo per year, and the cost of a stock out is $70 per kilo per year. Given the following demand probabilities during the lead time, how much safety stock should be carried?
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Demand During Lead Time (Kilos)
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Probability
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0
|
0.1
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100
|
0.1
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200
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0.2
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300
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0.4
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400
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0.2
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