The restaurant you’re working at makes one large batch of potato salad each day. If you run out before the end of the day, the last few customers are not satisfied, but if you make too much, it can be sold to the local hog farmer for feed. Every serving costs $0.23 to make, but can be sold for $1.50 to customers and for $0.07 to the hog farmer. The average daily demand is for 200 servings with a standard deviation of 20 servings.
a) What is the target service level?
b) How much potato salad should your restaurant make each day to meet this service level?