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The Littlewood's Rule indicates that the optimal protection level is determined by only three information: the low/high fare ratio, the high price demand mean, and the high price demand volatility (e.g., standard deviation). The table below is from the PPT file's "Littlewood Excel Example," where we calcuate the optimal protection levels y* using the Excel function =norminv(1-pd/pf, high price demand mean , high price demand standard deviation). Please answer the following questions based on the patterns you observed from the table.
Problem 1: When the fare ratio decreases from 0.6 to 0.4, how does y* change? What does it mean in terms of the capacity allocation?
A copier company has been using same Copier A for 5 years. This copier can copy approximately 50 sheets a minute. The company has opportunity to purchase the new Copier B which can process approximately 60 sheets a minute.
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