Cafe Kibbe adds North African flavours to traditional Mediterranean-Arab recipes. Located in a quarter of the old city o

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Cafe Kibbe adds North African flavours to traditional
Mediterranean-Arab recipes. Located in a quarter of the old city of
Casablanca, Morocco, the restaurant attracts affluent locals and
tourists. Cafe Kibbe serves lunch and dinner seven days a week, and
offers breakfast on weekends. Nabil al-Dhahabi, the manager, has
faced some difficulties with ordering the right amounts of food
items for the restaurant. Because of this, there are some weeks the
restaurant has a surplus of menu items that are no longer fresh,
and must be discarded. At other times, the restaurant has
experienced shortages of some items. The fact that inventory
accounts for an average cost of 26% of the restaurant's total
revenue underscores the importance of managing inventory. Nabil
would like to find a way to ensure that he is maintaining the
proper amount of inventory. Customer counts at Cafe Kibbe have been
declining recently, so one of Nabil's greatest focuses is to keep
current customers and attract new customers. He believes that a key
aspect of this is having all of the items on the menu in stock.
This way, discerning locals are satisfied and tourists have a
positive experience that they report to their friends and on
tourism recommendation websites. Online inventory systems are used
to assist restaurant managers in determining on-hand inventory and
gauging how well the restaurant is controlling food costs. The
fiscal week for Cafe Kibbe starts on Saturday and ends on Friday of
the following week (the weekend in Morocco is Saturday and Sunday).
Each Friday, the manager physically counts the inventory on hand
and enters the data into the online inventory system. The computer
software system then compares the on-hand inventory for that week,
the amount of food ordered, and the inventory on hand for the end
of the previous week with the sales for the current week. By doing
so, it is able to determine a total food cost. The manager compares
this cost with the benchmark cost to see how well the restaurant
has been managing its inventory. This is one of the most important
numbers Nabil at Cafe Kibbe because it accounts for approximately
30% of total costs in terms of the cost structure. The computer
software system also compares the total cost of food on hand with
the total amount of sales for that week and computes a percentage
of on-hand inventories. As a guideline, comparable full-service
restaurants in the same market segment have between 29% and 36% for
the on-hand inventory level. This level of inventory is considered
an appropriate average to ensure quality food that is fresh and
within expiration. Lastly, it is better to keep the inventory at a
minimum level to ensure the accuracy and ease of inventory counts.
Cafe Kibbe has been running above average in terms of food costs.
For this reason, the owners have become concerned with the
performance of the ordering system that Nabil is using at the
restaurant. Nabil has been using his intuition to decide how much
product to order despite the fact that the product order sheets
provide a moving average usage of each product. Nabil bases his
inventory management on his intuition because he does not
understand how to utilize the moving average forecasting technique
when placing orders. An additional complication with ordering
inventory is that items are often packed in multiple quantities, so
he cannot order the exact amount that he needs. Nabil's boss
requested that he create a more accurate way of ordering food and
to report back to him in one month. Nabil is worried that if he
cuts inventory levels too low he will run out of products which may
result in a decrease in customer counts. After Nabil met with his
boss, he began to think about what changes he could make. He knows
that inventory has been a weak point for him, but he remembers one
of his employees talking about inventory management from one of his
college courses. Nabil decides to ask the employee if he would be
willing to help him try and come up with a better way for him to
order products. Nabil tells him how the ordering system works,
shows him the ordering form, and relates the above
information.
Given the above information and supposing an on-hand
inventory of 12, determine the risk of stock out at the end of
initial lead time and at the end of the second lead time. The lead
time is two days and orders are placed once a week.

Please show one by one step. Thank you.