A sporting goods store must decide how many special-edition…
A sporting goods store must decide how many special-edition ski jackets to order for the upcoming winter break season. The jackets are a one-time item; any unsold jackets at the end of the season are heavily discounted. The selling price during the season is $180 per jacket and the purchase cost from the supplier is $120 per jacket. Unsold jackets will be offered at the end-of-season clearance (salvage) price of $80 per jacket. Demand for this special-edition jacket during the season is approximately Normal with a mean demand of 400 jackets and a standard deviation of 150 jackets. Assume the store places only one order before the season and cannot reorder. What is the ideal service level they should try to achieve (ie in-stock probability)?