please send solution for part b A newspaper vendor wants to determine his daily newspaper order while considering uncertainty in customerdemand. Specifically, each morning, the vendor must decide how many papers to buy at the wholesale price(0.8 TL). The vendor then sells these papers to the customers during the day at a retail price (2.0 TL) in theamount depending on the demand and available newspaper at hand. At the end of the day, any unsold paperscan be sold back to the wholesaler at a scrapped price (0.4 TL). Since the newspaper vendor did not keep trackof the past sales data of each day, he can guess a range for possible demand realizations, with the minimumand maximum values as 200 and 260. Due to this lack on information in past data, the newspaper vendorassumes demand is uniformly distributed within this range.(a)(3%) Write down the expected profit function of the newspaper vendor using the cost valuesspecified in the question by specifying the variables. Compute the values of the underage cost and overagecost.(b)(9%) Determine the optimal order quantity of the newspaper vendor based on the given demanddistribution. Show all your work clearly.(c)(4%) Consider the case when the retail price changes to 1.5 TL and scrapped price changes to 0.2 TL.Discuss how the underage cost and overage cost will change in this case. Discuss how this change will impactthe order quantity you find in part (b) considering these costs (You do not need to calculate the order quantity).(d)(4%) Consider the case when demand has a different distribution, such as Normal distribution withmean = 300 and standard deviation = 20. Does this effect how you find the order quantity in part (b)? If yes,explain how it impacts the solution steps and order quantity clearly (You do not need to calculate the orderquantity).

Answered: (b) (9%) Determine the optimal order…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section11.4: Marketing Models

Problem 30P: Seas Beginning sells clothing by mail order. An important question is when to strike a customer from...

See similar textbooks

Similar questions

The Pigskin Company produces footballs. Pigskin must decide how many footballs to produce each month. The company has decided to use a six-month planning horizon. The forecasted monthly demands for the next six months are 10,000, 15,000, 30,000, 35,000, 25,000, and 10,000. Pigskin wants to meet these demands on time, knowing that it currently has 5000 footballs in inventory and that it can use a given months production to help meet the demand for that month. (For simplicity, we assume that production occurs during the month, and demand occurs at the end of the month.) During each month there is enough production capacity to produce up to 30,000 footballs, and there is enough storage capacity to store up to 10,000 footballs at the end of the month, after demand has occurred. The forecasted production costs per football for the next six months are 12.50, 12.55, 12.70, 12.80, 12.85, and 12.95, respectively. The holding cost incurred per football held in inventory at the end of any month is 5% of the production cost for that month. (This cost includes the cost of storage and also the cost of money tied up in inventory.) The selling price for footballs is not considered relevant to the production decision because Pigskin will satisfy all customer demand exactly when it occursat whatever the selling price is. Therefore. Pigskin wants to determine the production schedule that minimizes the total production and holding costs. As indicated by the algebraic formulation of the Pigskin model, there is no real need to calculate inventory on hand after production and constrain it to be greater than or equal to demand. An alternative is to calculate ending inventory directly and constrain it to be nonnegative. Modify the current spreadsheet model to do this. (Delete rows 16 and 17, and calculate ending inventory appropriately. Then add an explicit non-negativity constraint on ending inventory.)
The Pigskin Company produces footballs. Pigskin must decide how many footballs to produce each month. The company has decided to use a six-month planning horizon. The forecasted monthly demands for the next six months are 10,000, 15,000, 30,000, 35,000, 25,000, and 10,000. Pigskin wants to meet these demands on time, knowing that it currently has 5000 footballs in inventory and that it can use a given months production to help meet the demand for that month. (For simplicity, we assume that production occurs during the month, and demand occurs at the end of the month.) During each month there is enough production capacity to produce up to 30,000 footballs, and there is enough storage capacity to store up to 10,000 footballs at the end of the month, after demand has occurred. The forecasted production costs per football for the next six months are 12.50, 12.55, 12.70, 12.80, 12.85, and 12.95, respectively. The holding cost incurred per football held in inventory at the end of any month is 5% of the production cost for that month. (This cost includes the cost of storage and also the cost of money tied up in inventory.) The selling price for footballs is not considered relevant to the production decision because Pigskin will satisfy all customer demand exactly when it occursat whatever the selling price is. Therefore. Pigskin wants to determine the production schedule that minimizes the total production and holding costs. Modify the Pigskin model so that there are eight months in the planning horizon. You can make up reasonable values for any extra required data. Dont forget to modify range names. Then modify the model again so that there are only four months in the planning horizon. Do either of these modifications change the optima] production quantity in month 1?
Lemingtons is trying to determine how many Jean Hudson dresses to order for the spring season. Demand for the dresses is assumed to follow a normal distribution with mean 400 and standard deviation 100. The contract between Jean Hudson and Lemingtons works as follows. At the beginning of the season, Lemingtons reserves x units of capacity. Lemingtons must take delivery for at least 0.8x dresses and can, if desired, take delivery on up to x dresses. Each dress sells for 160 and Hudson charges 50 per dress. If Lemingtons does not take delivery on all x dresses, it owes Hudson a 5 penalty for each unit of reserved capacity that is unused. For example, if Lemingtons orders 450 dresses and demand is for 400 dresses, Lemingtons will receive 400 dresses and owe Jean 400(50) + 50(5). How many units of capacity should Lemingtons reserve to maximize its expected profit?
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.
Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?
When you use a RISKSIMTABLE function for a decision variable, such as the order quantity in the Walton model, explain how this provides a fair comparison across the different values tested.
If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.
It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.
The accompanying table shows a bookstore's estimated demand for a new calendar. The bookstore needs to decide whether to order100, 200, or 300 calendars for the start of the year. Each calendar costs the store$5 to purchase and can be sold for $13. The store can sell any unsold calendars back to its supplier for $3 each. Determine the number of calendars the bookstore should order to maximize its expected monetary value. Demand Probability 100 0.35 200 0.25 300 0.40 The bookstore should order---------calendars in order to have the maximum expected monetary value of $----- (Type a whole number.)
3-2) The optimal quantity of the three products and resulting revenue for Taco Loco is: A) 28 beef, 80 cheese, and 39.27 beans for $147.27. B) 10.22 beef, 5.33 cheese, and 28.73 beans for $147.27. C) 1.45 Z, 8.36 Y, and 0 Z for $129.09. D) 14 Z, 13 Y, and 17 X for $9.81. 3-3) Taco Loco is unsure whether the amount of beef that their computer thinks is in inventory is correct. What is the range in values for beef inventory that would not affect the optimal product mix? A) 26 to 38.22 pounds B) 27.55 to 28.45 pounds C) 17.78 to 30 pounds D) 12.22 to 28 pounds
The Wilcox Manufacturing Company produces an item that is subject to wide seasonal fluctuations in sale. The forecasted demand for the next 6 months for the forthcoming year are given below: Jan 3000 Feb 5000 March 8000 April 9000 May 4000 June 2000 The firm must always meet the monthly demand requirements. It can fulfill the demand either by producing the required amount during the particular month or by producing only part of the required amount and making up the difference by using the overproduction (inventory) from previous months. The Accounting Department has estimated that it costs $2.00 to increase output by one unit from one month to the next and $1.00 to reduce output by one unit from one month to another. The monthly cost of storing 1 unit of product is $1.50. The warehouse capacity limits maximum inventory to 5000 units. The production capacity of Wilcox for any month is limited to 7000 units. The production schedule for the month of December in the…
Kpogas produces chairs and tables. Using economic forecast for the next month, Kpogas’ marketing manager has judged that during that period, it will be possible to sell as many chairs or tables as the company can produce. Management must now recommend a production target for next month. That is, how many chairs and tables should be produced if Kpogas’ management wishes to maximize next month’s profit contribution? Making this decision requires a consideration of the following key factors: ● Kpogas’s unit contribution margin is GH¢ 5,000 on each chair that is sold and GH¢ 4,000 on each table that is sold. ● Each product is put through Kpogas’s machining operations in both department A and department B. For next month’s production, the two departments have 150 and 160 hours available time, respectively. Each chair produced uses 10 hours of machining in department A and 20 hours of machining in department B, whereas each table produced uses 15 hours of machining in department A and 10…

SEE MORE QUESTIONS

Recommended textbooks for you

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

Practical Management Science

Operations Management

ISBN:

9781337406659

Author:

WINSTON, Wayne L.

Publisher:

Cengage,

SEE MORE TEXTBOOKS

(b) (9%) Determine the optimal order quantity of the newspaper vendor based on the given demand distribution. Show all your work clearly.