Consider that the annual demand of a product is uniformly distributed between 200 and 300 units. Profit per unit sold is 10,000 rupees and the annual cost can be assumed to be constant at 23,00,000 rupees. Obtain distribution and density functions of random profit.

Consider that the annual demand of a product is uniformly distributed between 200 and 300 units. Profit per unit sold is 10,000 rupees and the annual cost can be assumed to be constant at 23,00,000 rupees. Obtain distribution and density functions of random profit.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

See similar textbooks

Similar questions

A piece of industrial machinery costs $48,000 to replace and has essentially no salvagevalue. Over the first five years of operation, maintenance costs amounted to $8,000. Ifthe maintenance cost rate is a linear function of time, what is the optimal age at whichto replace the machinery?
Watch Entice sells high end watches. The annual demand for the company’s product is 57,000 units.Ordering costs are $500 per order and carrying costs are $90 per unit, including $40 in the opportunitycost of holding inventory. It currently takes 2 weeks to supply an order to the store. The following tableshows the probability distribution of various demand levels during the 2-week purchase-order lead time:Total Demand Probability of Demand800 0.05900 0.21,000 0.51,100 0.21,200 0.05 Watch Entice does not hold any safety stock. If the company runs of stock, it has to rush order thecomputers at an additional cost of $10 per computer. What is the stock out cost?A. $21,600B. $14,400C. $7,200D. $17,400
Consider the case where the left tail of the implied distribution is thinner than that of the log-normal distribution and the right tail of the implied distribution is fatter than that of the log-normal distribution with the same mean and standard deviation. Which of the following statements is correct? A) The implied volatility of a deep out-of-the money put is greater than the one obtained from the Black-Scholes price. B) The implied volatility decreases as the strike price increases. C) The implied volatility of a deep out-of-the money call is smaller than the one obtained from the Black-Scholes price. D) The implied volatility increases as the strike price increases. Please explain and justify your choice. In your answer, discuss the shape of the relation of implied volatility to the strike price and explain how this is obtained.
Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table: For example, the probability of getting a batch of tests that are 1% defective from Winter Park Technology is .70. Because Kellogg orders 10,000 tests per order, this would mean that there is a .70 probability of getting 100 defective tests out of the 10,000 tests if Winter Park Technology is used to fill the order. A defective Breathalyzer test set can be repaired for $0.50. Although the quality of the test sets of the second supplier, Dayton Enterprises, is lower, it will sell an order of 10,000 test sets for $37 less than Winter Park. a) Develop a Decision Treeb) Which supplier should Kellog use? Percent Defective Probability for Winter Park Technology Probability for Dayton Enterprises 1 0.70 0.30 3 0.20 0.30 5 0.10 0.40
A company owns a 5-year-old turret lathe that has a book value of $23,000. The present market value for the lathe is $18,000. The expected decline in market value is $1,700/year to a minimum market value of $4,080; maintenance plus operating costs for the lathe equal $4,470/year.A new turret lathe can be purchased for $46,000 and will have an expected life of 8 years. The market value for the turret lathe is expected to equal $46,000(0.70)k at the end of year k. Annual maintenance and operating cost is expected to equal $1,900. Based on a 12% MARR, should the old lathe be replaced now? Use an equivalent uniform annual cost comparison, a planning horizon of 7 years, and the cash flow approach.EUAC for keeping old turret lathe: $EUAC for replacing turret lathe: $
ULINE packaging supplies has a contract to fill 50 gallon barrels with gasoline for use by the U.S. Army. The machine that ULINE uses has an adjustable device that allows the average fill per barrel to be adjusted as desired. However, the actual distribution of fill volume from the machine is known to be normally distributed with a standard deviation equal to 0.5 gallons. The contract that ULINE has with the military calls for no more than 2 percent of all barrels to contain less than 49.2 gallons of gasoline. In order to meet this requirement, ULINE should set the mean fill to approximately 49.92 gallons. 00 True False