At each of its home games,the Washington Check-Kiters football team sells programs that give statistics of the teams involved in the current game's contest.Since each game brings a different visiting team,a program is only of value for one contest,and no returns will be accepted by the supplier.On a per-program basis,the selling price is twice the cost.The target service level that will yield the most profits is:
A)33 percent
B)50 percent
C)67 percent
D)75 percent

Question

Quizplus · Accepted Answer

Since each program is only of value for one contest, the demand for a program is essentially a one-time event. This makes it difficult to predict the demand accurately. Therefore, the team should adopt a conservative approach and aim for a service level that ensures a high probability of meeting demand.
At higher service levels, the team may end up with excess inventory if the demand is less than anticipated, and this can result in losses. On the other hand, at lower service levels, the team may not be able to satisfy demand, resulting in missed opportunities and lower profits.
A service level of 50% strikes a balance between these two risks and provides a high enough probability of meeting demand without incurring significant inventory costs. Therefore, the best choice is B.

At Each of Its Home Games,the Washington Check-Kiters Football Team