a) Zed and Adrian run a small bicycle shop called "Z to A Bicycles". They must order bicycles for the coming season. Orders for the bicycles 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 order 60, and R1340 if they order 80. The bicycles will be sold for R5000 each. Any bicycles left over 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 per customer who was unable to buy a bicycle. Zed and Adrian estimate that the demand for bicycles this season will be 10, 30, 50, or 70 bicycles with probabilities of 0.2, 0.4, 0.3, and 0.1 respectively. Set-up the cost payoff matrix for this problem.
a) Zed and Adrian run a small bicycle shop called "Z to A Bicycles". They must order bicycles for the coming season. Orders for the bicycles 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 order 60, and R1340 if they order 80. The bicycles will be sold for R5000 each. Any bicycles left over 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 per customer who was unable to buy a bicycle. Zed and Adrian estimate that the demand for bicycles this season will be 10, 30, 50, or 70 bicycles with probabilities of 0.2, 0.4, 0.3, and 0.1 respectively. Set-up the cost payoff matrix for this problem.
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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![a) Zed and Adrian run a small bicycle shop called "Z to A Bicycles". They must order bicycles
for the coming season. Orders for the bicycles 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 order
60, and R1340 if they order 80. The bicycles will be sold for R5000 each. Any bicycles left
over 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 per
customer who was unable to buy a bicycle. Zed and Adrian estimate that the demand for
bicycles this season will be 10, 30, 50, or 70 bicycles with probabilities of 0.2, 0.4, 0.3, and
0.1 respectively. Set-up the cost payoff matrix for this problem.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdffa0d4f-9671-41bf-b34d-8e971e176b9f%2Fd49c64b3-e002-4d2d-8a5b-029bc80d995c%2Fp0yab1m_processed.jpeg&w=3840&q=75)
Transcribed Image Text:a) Zed and Adrian run a small bicycle shop called "Z to A Bicycles". They must order bicycles
for the coming season. Orders for the bicycles 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 order
60, and R1340 if they order 80. The bicycles will be sold for R5000 each. Any bicycles left
over 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 per
customer who was unable to buy a bicycle. Zed and Adrian estimate that the demand for
bicycles this season will be 10, 30, 50, or 70 bicycles with probabilities of 0.2, 0.4, 0.3, and
0.1 respectively. Set-up the cost payoff matrix for this problem.
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