Inventory of ski jackets: A clothing company sells ski jacket every winter but must decide in the summer how many jackets to produce. Each jacket costs $65 to produce and ship, and sells for $129 at retail stores. Customers who wish the buy this jacket but find it out of stock will buy a competitors jacket; in addition to the lost revenue, the company also incurs a loss-of-goodwill cost o $15 for each lost sale. At the end of the winter, unsold jackets are sold to a discount clothing store for $22 each. (a) First suppose that demand for the ski jackets this winter will be distributed as a normal random variable with mean 900 and standard deviation 60. What is the optimal number of jackets to produce? (b) Now suppose that the demand is distributed as a Poisson random variables with mean 900. What is the optimal number of jackets to produce?

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...
icon
Related questions
Question

Please do not give solution in image formate thanku.

Inventory of ski jackets: A clothing company sells ski jacket every winter but must decide in the summer how many jackets to produce. Each jacket costs $65 to produce and ship, and sells for $129 at retail stores. Customers who wish the buy this jacket but find it out of stock will buy a competitors jacket; in addition to the lost revenue, the company also incurs a loss-of-goodwill cost o $15 for each lost sale. At the end of the winter, unsold jackets are sold to a discount clothing store for $22 each.

(a) First suppose that demand for the ski jackets this winter will be distributed as a normal random variable with mean 900 and standard deviation 60. What is the optimal number of jackets to produce?

(b) Now suppose that the demand is distributed as a Poisson random variables with mean 900. What is the optimal number of jackets to produce?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 12 images

Blurred answer
Similar questions
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.