Ranch’s Candies operates 50 candy stores generally distribut…
Ranch’s Candies operates 50 candy stores generally distributed in 7 Southern USA states. The stores operate out of mall locations and currently carry their own inventory of products. Each store keeps a three-week supply of each candy product they sell. Some of these products are “fast movers” like Sour Patch Kids, Gummies, and Skittles, while others are slow movers like Boston Baked Beans and Riley’s Chocolate Covered Raisins. The sales price of each product sold is set to be $1.50 higher than the product’s cost to Ranch. So although products will have different costs and prices, the margin on each product is the same. The slow-moving products will often be left unsold after the product expiration date, requiring the store manager to cut the retail price in half to move it off the shelves. The prices of fast-moving products are never reduced. The current store policy is to have a 90% customer service level across all product categories. Using the logic of the Newsvendor model, Ranch’s Candies should:
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