In newsvendor setting-keeping all else equal

Assignment Help Operation Management

Reference no: EM132193097

1. Pizza Parlor sells pizzas by the slice after college football games, selling them outside the stadium when the game is ended and everyone leaves. That means they need a certain number of slices available in a very short time window, with no time to cook more. A pizza is 6 slices; the average demand after a game is 1,000 slices with a standard deviation of 200 slices. They sell a slice for $4 and it costs them $6 per pizza (per 6 slices) with any leftovers thrown out. How many pizzas (not slices, but pizzas) should they cook and have ready to sell just before the game ends?

Approximately 1,130

Approximately 167

Approximately 190

Approximately 195

2. The maximum price that the firm "Pear" can ask for the new jPad model is $1,500 (i.e., if Pear would ask more than this, they would not sell a single unit), and if they were to give them away for nothing, Pear would "sell" 12,000 per day. It costs Pear $500 to manufacturer and deliver these jPads to their stores. The optimal price can be established at $1,000 (i.e., halfway between the maximum and the costs). Determine the sales at this price.

12,000

8,000

4,000

6,000

3. In a Newsvendor setting, keeping all else equal, we should increase our order when:

The cost of overage decreases

The average demand decreases

The cost of underage decreases

The cost of overage increases

4. The average demand for a vaccine for a newly discovered disease is 1 million doses, with a standard deviation of 1 million (nobody knows if there will be an epidemic). Each dose costs $200 to produce. If there is not enough vaccine for all the people who want to be vaccinated, the estimated gross cost to society is $300 per person (i.e., this is the weighted average cost not considering the cost of the vaccine - at one extreme a person who isn't vaccinated may not even get sick while at the other extreme the person may die). What is the socially-optimal number of doses to produce? Assume that when the epidemic hits, it is too late to produce more, and left-over doses are worthless. Hint: think of this just as you would if you were a retailer buying a product at some cost, then selling it at some higher price, without any salvage value.

569,000

1,253,000

1,566,000

747,000

Reference no: EM132193097

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