a) Zed and Adrian run a small bicycle shop called "Z to A Bicycles". They must order bicyclesfor the coming season. Orders for the bicycdes must be placed in quantities of twenty (20).The cost per bicycle is R1700 if they order 20, R1650 if they order 40, R1550 if they order60, and R1340 if they order 80. The bicycles will be sold for R5000 each. Any bicycles leftover at the end of the season can be sold (for certain) at R1450 each.If Zed and Adrian run out of bicycles during the season, then they will suffer a loss of"goodwill" among their customers. They estimate this goodwill loss to be R500 percustomer who was unable to buy a bicycle. Zed and Adrian estimate that the demand forbicycles this season will be 10, 30, 50, or 70 bicycles with probabilities of 0.2, 0.4, 0.3, and0.1 respectively. Set-up the cost payoff matrix for this problem.

A pay-off matrix helps in determining the value of different alternatives on the basis of possible…

Answered: a) Zed and Adrian run a small bicycle…

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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