Palmer Jam Company is a small manufacturer of several different jam products. One product is an organic jam that has no preservatives, sold to retail outlets. Susan Palmer must decide how many cases of jam to manufacture each month. Theprobability that demand will be 5 cases is 0.10, for 6 cases it is 0.30, for 7 cases it is 0.50, and for 8 cases it is 0.10. The cost of every case is $40, and the price Susan gets for each case is $85. Unfortunately, any cases not sold by the end ofthe month are of no value as a result of spoilage.Based on the given information, Susan's conditional profits table for jam is:Demand5 cases6 cases7 cases8 casesProducep= 0.10p = 0.30p= 0.50p = 0.105 cases6 cases7 cases8 casesThe number of cases that Susan should produce to achieve maximum expected value (EMV) iscases.The EMV of stocking this number of cases is $ (round your answer to the nearest whole number).

Expected monetary value (EMV) is a risk management technique that may be used to measure and analyze…

Answered: Palmer Jam Company is a small…

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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QUESTION 3 Samoto Limited (SL) relies on an external supplier for production capacity. In order to gain access to a certain level of production capacity, SL will have to commit to an annual contract before the start of the operating period. The contract will stipulate the production capacity entitlement of SL. SL has a choice of three contracts: Contract Mega, Contract Upper, and Contract Soso. Regardless of the choice of contract, the company will be subject to three states of nature: high demand, medium demand and low demand. The net profits generated by each of the contracts under the three states of nature are as follows: Net profit (£000) Medium demand High demand Low demand Contract Mega Contract Upper Contract Soso 20,000 17,000 16,500 15,500 16,000 15,000 11,000 12,000 13,000 The probabilities of the states of nature are as follows: High demand Medium demand Low demand 25% 45% 30% Probability
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