Doc Nix Productions sells specialty T-Shirts that are sold at a single basketball game each. Doc Nix is trying to decide how many to buy for an upcoming game. During the game itself, which lasts one evening, Doc can sell T-Shirts for $10 apiece. However, when the game ends unsold T-shirts have no value. Due to a licensing agreement, Doc needs to make sure that leftover shirts are destroyed using a method that ends up costing $0.50 for each unsold T-Shirt. It costs Doc $6.50 to buy a specialty T-Shirt from the supplier. The supplier he uses has a cost per shirt of $2. Doc estimates that demand is distributed as shown below. Demand 300 350 400 450 500 550 Probability 0.05 0.15 0.20 0.10 0.30 0.20 How many specialty T-Shirts should Doc Nix buy from the supplier to maximize his profits? What is his expected profit? What is the total supply chain profit?

Doc Nix Productions sells specialty T-Shirts that are sold at a single basketball game each. Doc Nix is trying to decide how many to buy for an upcoming game. During the game itself, which lasts one evening, Doc can sell T-Shirts for $10 apiece. However, when the game ends unsold T-shirts have no value. Due to a licensing agreement, Doc needs to make sure that leftover shirts are destroyed using a method that ends up costing $0.50 for each unsold T-Shirt. It costs Doc $6.50 to buy a specialty T-Shirt from the supplier. The supplier he uses has a cost per shirt of $2. Doc estimates that demand is distributed as shown below. Demand 300 350 400 450 500 550 Probability 0.05 0.15 0.20 0.10 0.30 0.20 How many specialty T-Shirts should Doc Nix buy from the supplier to maximize his profits? What is his expected profit? What is the total supply chain profit?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section10.4: Simulation With Built-in Excel Tools

Problem 14P

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