Business
Business, 03.04.2020 20:51, marqueen1

Harvey's Specialty Shop is a popular spot that specializes in international gourmet foods. One of the items that Harvey sells is a popular mustard that he purchases from an English company. The mustard costs Harvey $10 a jar and requires a six-month lead time for replenishment of stock. Harvey uses a 20 percent annual interest rate to compute holding costs and estimates that if a customer requests the mustard when he is out of stock, the loss-of-goodwill cost is $25 a jar. Bookkeeping expenses for placing an order amount to about $50. During the six-month replenishment lead time, Harvey estimates that he sells an average of 100 jars, but there is substantial variation from one six-month period to the next. He estimates that the standarddeviation of demand during each six-month period is 25. Assume that demand is described by a normal distribution.

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