1. Consider the following demand scenario: Quantity Probability 2,000 2,100 3% 8% 2,200 15% 2,300 2,400 30% 17% 2,500 12% 2,600 10% 2,700 5% Suppose the manufacturer produces at a cost of $20/unit and sells to the distributor at $40/unit. The distributor sells to end customers for $50/unit during season; unsold units are sold for $10/unit after season. 1. Assume the manufacturer will buy any unsold items at price $32/unit. What is the optimal order quantity? 2. What is the expected number of unsold items? 3. What is the profit for the distributor?
1. Consider the following demand scenario: Quantity Probability 2,000 2,100 3% 8% 2,200 15% 2,300 2,400 30% 17% 2,500 12% 2,600 10% 2,700 5% Suppose the manufacturer produces at a cost of $20/unit and sells to the distributor at $40/unit. The distributor sells to end customers for $50/unit during season; unsold units are sold for $10/unit after season. 1. Assume the manufacturer will buy any unsold items at price $32/unit. What is the optimal order quantity? 2. What is the expected number of unsold items? 3. What is the profit for the distributor?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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