Doc Nix Productions sells specialty T-Shirts that are sold at a single basketball game each. Doc Nix is trying to decide how many to buy for an upcoming game. During the game itself, which lasts one evening, Doc can sell T-Shirts for $10 apiece. However, when the game ends unsold T-shirts have no value. Due to a licensing agreement, Doc needs to make sure that leftover shirts are destroyed using a method that ends up costing $0.50 for each unsold T-Shirt. It costs Doc $6.50 to buy a specialty T-Shirt from the supplier. The supplier he uses has a cost per shirt of $2. Doc estimates that demand is distributed as shown below. Demand 300 350 400 450 500 550 Probability 0.05 0.15 0.20 0.10 0.30 0.20 How many specialty T-Shirts should Doc Nix buy from the supplier to maximize his profits? What is his expected profit? What is the total supply chain profit?
Doc Nix Productions sells specialty T-Shirts that are sold at a single basketball game each. Doc Nix is trying to decide how many to buy for an upcoming game. During the game itself, which lasts one evening, Doc can sell T-Shirts for $10 apiece. However, when the game ends unsold T-shirts have no value. Due to a licensing agreement, Doc needs to make sure that leftover shirts are destroyed using a method that ends up costing $0.50 for each unsold T-Shirt. It costs Doc $6.50 to buy a specialty T-Shirt from the supplier. The supplier he uses has a cost per shirt of $2. Doc estimates that demand is distributed as shown below. Demand 300 350 400 450 500 550 Probability 0.05 0.15 0.20 0.10 0.30 0.20 How many specialty T-Shirts should Doc Nix buy from the supplier to maximize his profits? What is his expected profit? What is the total supply chain profit?
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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Doc Nix Productions sells specialty T-Shirts that are sold at a single basketball game each. Doc Nix is trying to decide how many to buy for an upcoming game. During the game itself, which lasts one evening, Doc can sell T-Shirts for $10 apiece. However, when the game ends unsold T-shirts have no value. Due to a licensing agreement, Doc needs to make sure that leftover shirts are destroyed using a method that ends up costing $0.50 for each unsold T-Shirt. It costs Doc $6.50 to buy a specialty T-Shirt from the supplier. The supplier he uses has a cost per shirt of $2. Doc estimates that demand is distributed as shown below.
|
Demand |
300 |
350 |
400 |
450 |
500 |
550 |
|
Probability |
0.05 |
0.15 |
0.20 |
0.10 |
0.30 |
0.20 |
- How many specialty T-Shirts should Doc Nix buy from the supplier to maximize his profits?
- What is his expected profit?
- What is the total supply chain profit?
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