Compute the expected profit associated with each posible

Assignment Help Mathematics

Reference no: EM13180145

Arrowmark Vending has the contract to supply pizza at all home football games for a university in the Big 12 atheletic conference. It is a constant challenge at each game to determine how many pizzas to have available at the games. Tom Kealey, operations manager for Arrowmark, has determined that his fixed cost of providing pizzas, whether he sells 1 pizza or 4000 pizzas, is $1,000. This cost includes hiring employees to work at the concession booths, hiring extra employees to cook the pizzas the day of the game, delivering them to the game, and advertising during the game. He believes that this cost should be equally allocated between two types of pizzas.

Tom has determined that he will supply only two types of pizzas: plain cheese and pepperoni and cheese combo. His cost to make a plain cheese pizza is $4.50 each, and his cost to make pepperoni and cheese combo is $5.00 each. Both pizzas will sell for $9.00 at the game. Unsold pizzas have no value and are donated to a local shelter for the homeless.

Past experience has shown the following demand distributions for the two types of pizza at home games:

Plain Cheese Demand/Probability
200 / 0.1
300 / 0.15
400 / 0.15
500 / 0.2
600 / 0.2
700 / 0.1
800 / 0.05
900 / 0.05

Pepperoni and Cheese Demand / Probability
300 / 0.1
400 / 0.2
500 / 0.25
600 / 0.25
700 / 0.15
800 / 0.05

1) For each type of pizza, determine the profit (or loss) associated with producing at each possible demand level. For instance, determine the profit if 200 plain cheese pizzas are produced, and 200 are demanded. What is the profit if 200 plain cheese pizzas are produced, but 300 were demanded, and so on.

2) Compute the expected profit associated with each posible production level (assuming Tom will only produce at one of the possible demand levels) for each type of pizza.

Reference no: EM13180145

Questions Cloud

What is the maximum revenue : What price should the company charge in order to maximize total revenue? What is the maximum revenue?

Explain how many total moles of oxygen gas can be generated : How many total moles of oxygen gas can be generated through this decomposition? B. If this oxygen is formed within the bottle described in question 1, what change in pressure would be predicted?

Calculate e(x) and var(x) : Let U be a uniform random variable on the interval (-pi/2, pi/2). Let X=sinU. Find the probability density function of X and calculate E(X) and var(X).

How long after the rocket is launched it will hit the ground : Use the quadratic formula to find out how long after the rocket is launched it will hit the ground. Round to the nearest tenth of a second.

Compute the expected profit associated with each posible : Compute the expected profit associated with each posible production level (assuming Tom will only produce at one of the possible demand levels) for each type of pizza.

State what is the pressure in atmospheres inside a container : What is the pressure in atmospheres inside a container of gas connected to a mercury-filled open-end manometer when the level in the arm connected to the container is 21.2cm higher than the level in the arm open

What is the value of m : A full m-ary tree has 81 leaves and height 4. (a) Give upper and lower bounds for m. (b) If the tree is also balanced, what is the value of m?

State how many moles of the conjugate base : Assume that .20 mol of the acid is added to 250 mL of water. To make a buffer of pH = 4, how many moles of the conjugate base must be added to the solution?

What proportion of sample means would fall : What proportion of sample means from samples of size n = 16 graduates fall within Â±$3,000 from the population mean? u=48600; o=8100 In repeated sampling of n = 25 graduates, what proportion of sample means would fall within ±$3,000 from the popula..

User Account

All Pages