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Finding change optimal order quantity

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"Nick and Jack" have decided to open their own restaurant. Based on the market research they have done, they know daily demand at their restaurant for hamburgers follows a Normal distribution with mean of 200 and standard deviation of 30. They sell each hamburger for $15. For the purpose of this question, let's assume each hamburger includes only one burger, meaning the costs for other ingredients is negligible. They purchase each burger for $5. Moreover, it costs them 50 cents to keep each burger in the fridge.

They order the burgers on a daily basis from a local supplier, and if there is any hamburger left over at the end of each day, they have to throw them out, according to rules and regulations. Finally, they pay 10 cents as a commission to their supply chain management teacher because of the debt they feel they owe him.

Part A. What is the optimal order quantity for their daily burger consumption?

Part B. What is their daily expected profit?

Part C. How much commission, per day, do they pay to their supply chain management teacher?

Part D. As a thank you, their supply chain management teacher makes the following suggestion:

"At the end of each day, any leftover burgers could be given to the neighborhood church. The tax deduction for this is worth 20 cents a burger."

How does this suggestion change the optimal order quantity; meaning what is the new optimal order quantity?

Part E. For this part, assume they decide to accept the above suggestion. Now, they ask Kellie and Victoria to d o a little bit more research about the market. Interestingly, Kellie and Victoria find that demand is NOT normally distributed. It has rather a uniform distribution between 50 and 250.

How does this finding change the optimal order quantity; meaning what is the new optimal order quantity?

Reference no: EM133317071

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