A milk man buys milk at K10 per litre and sells it at K12 if sold on the same day. If not, it can be sold at K9 per litre the next day. Demand of milk lies between 45 litres and 60 litres per day and is probabilities are uniformly distributed over this demand. If each day’s demand is independent of the previous day’s demand, how many litres should be ordered every day?

A milk man buys milk at K10 per litre and sells it at K12 if sold on the same day. If not, it can be sold at K9 per litre the next day. Demand of milk lies between 45 litres and 60 litres per day and is probabilities are uniformly distributed over this demand. If each day’s demand is independent of the previous day’s demand, how many litres should be ordered every day?

Name: A milk man buys milk at K10 per litre and sells it at K12 if sold on t
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Description: A milk man buys milk at K10 per litre and sells it at K12 if sold on the same day. If not, it can be sold at K9 per litre the next day. Demand of milk lies between 45 litres and 60 litres per day and is probabilities are uniformly distributed over th

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.
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