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Summary QuestionLarry sells a highly perishable food product to construction workers at 777 Peacht
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Larry sells a highly perishable food product to construction workers at 777 PeachtreeQuestionLarry sells a highly perishable food product to construction workers at 777 Peachtree, a new luxury high rise under-construction in mid-town Atlanta. The product costs Larry $4.50 wholesale and he sells the...

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  • October 6, 2024
  • 3
  • 2024/2025
  • Summary

Subjects

  • larry sells a highly perishable food product to co
  • a new luxury high rise under construction in mid
  • larry doesnt pay it anyway when larry runs out
  • he simply takes orders from his remaining custome
  • wa

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Larry sells a highly perishable food product to construction workers at 777

Peachtree, a new luxury high rise under-construction in mid-town Atlanta. The

product costs Larry $4.50 wholesale and he sells the product for $12.00 to his

construction worker clientele. Ignore sales tax, Larry doesn't pay it anyway.

When Larry runs out of product, he simply takes orders from his remaining

customers, walks to the Varsity Drive In, and buys the exact amount of product

needed to fill the orders. Larry charges each customer exactly $1.50 more per

product than his costs, which will be variable based on the exact food orders

placed by the individual workers. Larry only provides this "courier" service if

he runs out of his own product and performs the service to maintain goodwill

with his customers. If Larry instead of being under (on his own product), is

over, he has to discard the unsold product. Larry believes that his demand

follows a normal distribution with a mean of 175 and a standard deviation of 18.

Considering this information, what is Larry's optimum service level? Select the

closest answer.

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