A local farm produces cases of perishable food products

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A local farm produces cases of perishable food products. The products such as vegetables and fruits are packed in wooden cases. Each case costs $10 and sells for $20. If there are any cases not sold by the end of the day, they are sold to a large food processing company for $5 a case. The probability that daily demand will be 100 cases is 0.3, the probability that daily demand will be 200 cases is 0.4, and the probability that daily demand will be 300 cases is 0.3. The farm has a policy of always satisfying customer demands. If its own supply of cases is less than the demand, it buys the necessary vegetable from a competitor. The estimated cost of doing this is $35 per case. a) Draw a decision table for this problem. What do you recommend? b) Now assume that backlogging is possible and if a demand does not get satisfied, can be fulfilled in the following day with 20 percent discount. Redo the decision tree and recommendations.

Reference no: EM13905489

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