Reference no: EM131432777
Consider a perishable product whose daily demand can range from a low of 31 to a high of 50.
Demand is uniformly distributed over this range, so that sales of the product are equally likely to be anywhere from 31 to 50. Unsold units at the end of the day must be discarded.
a) The retailer selling the product wishes to maintain an 85% service level (i.e., probability of fulfilling demand should be at least 0.85). How many units should the retailer order each day?
b) What is the minimum number of additional units that the retailer should order each day if the desired service level is increased to 95%?
c) If the service level is 85%, what is the average numbers of units that are unsold each day?
d) If the retailer sells each unit for $10, what is the average daily revenue if the service level is 85%?
e) The retailer purchases each unit at a cost of $7. If the retailer is interested in maximizing expected profit, what is the optimal order quantity?
f) If the retailer were able to lower the unit purchase cost by 10%, what would be the corresponding percentage increase in profit?
g) The retailer sells a second products with similar price and purchase cost, but whose demand is uniformly distributed over the range of 36 to 45 (i.e., the mean of the two products are the same but their variances are different). If $10 is the selling price and $7 is the purchase cost, which product is more profitable (has a higher expected profit)? Compare the optimal order quantities for the two products.
h) Using Excel, generate the following plots for the two products discussed in g):
i) Expected profit versus order quantity (i.e., vary Q from 31 to 50 and plot the corresponding expected cost) for both products on the same figure,
ii) Expected revenue versus order quantity (i.e., vary Q from 31 to 50 and plot the corresponding expected cost) for both products on the same figure,
iii) Optimal order quantity versus the purchase cost (i.e., vary the purchase costs from 0 to 10 and plot the corresponding optimal order quantity).
Discuss the results observed.
|
Attributes of professional and technical presentations
: What general rule is used to determine the length of the validation period for the time series data? What are the attributes of professional and technical presentations?
|
|
Diagonal highway between boulder and longmont
: The Boulder County Highway Safety Department monitors speeding tickets issued on the Diagonal Highway between Boulder and Longmont. Speeding tickets issued on the Diagonal have averaged 12 per month. Which type of control chart should be used to moni..
|
|
Develop a material requirements plan
: A firm that produces electric golf carts has just received an order for 200 carts, which must be ready for delivery at the start of week 8. Construct a product tree. Construct an assembly time chart. Develop a material requirements plan that will pro..
|
|
Bottom budgeting concepts and crashing a project
: Excellent discussion breakdown on top/bottom budgeting concepts and crashing a project. Clearly there are management decisions in deterring which method to use and for which project. As with crashing a project, how much of an impact/change to the cri..
|
|
Consider a perishable product whose daily demand
: Consider a perishable product whose daily demand can range from a low of 31 to a high of 50. Demand is uniformly distributed over this range, so that sales of the product are equally likely to be anywhere from 31 to 50. What is the minimum number of ..
|
|
Personal experiences while participating in an orientation
: What should we do if we end up with two final candidates who are essentially equal in all of our measures? Explain some of your personal experiences while participating in an orientation and socialization program?
|
|
Prepare a material requirements plan for component
: One hundred twenty units of end item Z are needed at the beginning of week 7. Prepare a material requirements plan for component C. Take into account that on hand there are 40 units of Z, 70 Units of A, 100 units of B, and 30 units of C. Ninety-five ..
|
|
Organization is based on producing high-quality products
: Discuss the Following statement: “When the mission statement of an organization is based on the producing high-quality products, the organization will prosper over its competition.”
|