Question 1) Suppose we purchase a newspaper for $10 and if we manage to sell it, the sales price is $25. When a sale is made, we also have to pay a commission of $5 to the government. Salvage price is $3. What are the underage and overage costs? If demand follows a Normal distribution with mean=500 and standard deviation= 50, what is the optimal order quantity? What is the expected number of shortages? What is the expected profit? Question 2 Seattle Chemicals is setting up mobile store for one week at a small city fair in a remote area of Washington State, and it is deciding on the quantity of chemical products to stock up for this event. One particular chemical product, code IB-335, is obtained from manufacturer at $100 per bottle and Seattle Chemicals sells it for $450 per bottle to its customers at the event. There is no salvage value for any leftover units of IB-335. Also, because IB-335 has short shelf life and is highly toxic, each unsold bottle must be properly disposed after the fair ends. The disposal cost is estimated to be $55 per bottle. AtlasScientific PH400 IB-335 Оспом SC-9 From the historical transaction of IB-335, it is observed that customers always buy a bottle of cleaning solution (code SC- 9) together with IB-335. Therefore, it is conceivable that when IB-335 is not available, the store will also lose potential profit on SC-9. The profit margin for SC-9 is estimated at $50 per bottle. For simplicity, you may ignore all other costs and assume that SC-9 is always available. Finally, assume that demand for IB-335 at the event is equally likely to be between 12 and 21 bottles. What is the optimal stocking quantity for IB-335?
Question 1)
Suppose we purchase a newspaper for $10 and if we manage to sell it, the sales price is $25. When a sale is made, we also have to pay a commission of $5 to the government. Salvage price is $3. What are the underage and overage costs?
If demand follows a
Question 2
Seattle Chemicals is setting up mobile store for one week at a small city fair in a remote area of Washington State, and it is deciding on the quantity of chemical products to stock up for this event. One particular chemical product, code IB-335, is obtained from manufacturer at $100 per bottle and Seattle Chemicals sells it for $450 per bottle to its customers at the event. There is no salvage value for any leftover units of IB-335. Also, because IB-335 has short shelf life and is highly toxic, each unsold bottle must be properly disposed after the fair ends. The disposal cost is estimated to be $55 per bottle.
From the historical transaction of IB-335, it is observed that customers always buy a bottle of cleaning solution (code SC-9) together with IB-335. Therefore, it is conceivable that when IB-335 is not available, the store will also lose potential profit on SC-9. The profit margin for SC-9 is estimated at $50 per bottle.
For simplicity, you may ignore all other costs and assume that SC-9 is always available. Finally, assume that demand for IB-335 at the event is equally likely to be between 12 and 21 bottles.
What is the optimal stocking quantity for IB-335?
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