Answer:
421.53635
Explanation:
Let,
cost of underestimating the demand = Cu
cost of overestimating demand = Co
Cu = (Burger selling price - cost per burger) × No. of hamburgers prepared
= ($0.60 - $0.50) × 4
= $0.40
Co = Price of top-grade ground beef - Selling price of leftover meat
= $1 - $0.80
= $0.20
Service Level = Cu ÷ (Cu + Co)
= 0.40 ÷ (0.40 + 0.20)
= 0.40 ÷ 0.60
= 0.6667
Z-Value at above service level = 0.430727 (Taken from z-tables)
Optimal Order quantity = Mean + Z-Value × Standard Deviation
= 400 + 0.430727 × 50
= 400 + 21.53635
= 421.53635