Chip Bilton sells sweatshirts at State U football games.He is equally likely to sell 200 or 400 sweatshirts at eachgame. Each time Chip places an order, he pays $500 plus$5 for each sweatshirt he orders. Each sweatshirt sells for$8. A holding cost of $2 per shirt (because of the opportunitycost for capital tied up in sweatshirts as well as storagecosts) is assessed against each shirt left at the end of agame. Chip can store at most 400 shirts after each game.Assuming that the number of shirts ordered by Chip must be a multiple of 100, determine an ordering policy that maximizes expected profits earned during the first three games of theseason. Assume that any leftover sweatshirts have a value of $6.
Chip Bilton sells sweatshirts at State U football games.He is equally likely to sell 200 or 400 sweatshirts at eachgame. Each time Chip places an order, he pays $500 plus$5 for each sweatshirt he orders. Each sweatshirt sells for$8. A holding cost of $2 per shirt (because of the opportunitycost for capital tied up in sweatshirts as well as storagecosts) is assessed against each shirt left at the end of agame. Chip can store at most 400 shirts after each game.Assuming that the number of shirts ordered by Chip must be a multiple of 100, determine an ordering policy that maximizes expected profits earned during the first three games of theseason. Assume that any leftover sweatshirts have a value of $6.
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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Chip Bilton sells sweatshirts at State U football games.
He is equally likely to sell 200 or 400 sweatshirts at each
game. Each time Chip places an order, he pays $500 plus
$5 for each sweatshirt he orders. Each sweatshirt sells for
$8. A holding cost of $2 per shirt (because of the opportunity
cost for capital tied up in sweatshirts as well as storage
costs) is assessed against each shirt left at the end of a
game. Chip can store at most 400 shirts after each game.
Assuming that the number of shirts ordered by Chip must
be a multiple of 100, determine an ordering policy that maximizes expected profits earned during the first three games of the
season. Assume that any leftover sweatshirts have a value of $6.
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