Let g (D, y) be the profit when the order quantity is y and the demand is D. In the newsvendor problem, we aim to maximize the expected profit. Which of the following expressions is the mathematical representation of this objective? maxp Eg(D, y)] O max, E[g(D, y)] O Emaxp g(D, y)] max, g(E[D], y) Emax, 9(D, y)]

Let g (D, y) be the profit when the order quantity is y and the demand is D. In the newsvendor problem, we aim to maximize the expected profit. Which of the following expressions is the mathematical representation of this objective? maxp Eg(D, y)] O max, E[g(D, y)] O Emaxp g(D, y)] max, g(E[D], y) Emax, 9(D, y)]

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 6E: The economic analysis division of Mapco Enterprises has estimated the demand function for its line...

See similar textbooks

Similar questions

A large company in the communication and publishing industry has quantiﬁed the relationship between the price of one of its products and the demand for this product as Price = 150−0.01 × Demand for an annual printing of this particular product. The ﬁxed costs per year (i.e., per printing) = $50,000 and the variable cost per unit=$40. What is the maximum proﬁt that can be achieved if the maximum expected demand is 6,000 units per year? What is the unit price at this point of optimal demand?
an entrepreneur is setting up a storage facility which will provide storage bothat peak times and off peak times.The entrepreneur need to decide how much money storage Q1 t to supply at peak times, and how much storage Q2 to supply off peakit also needs to decide how to set up capacity K, where capacity is such that both K is equal or plus Q1 and K is equal or plus Q2The peak period demand fan storage is given by PI=7200 -Q1 and the off peak is give by P2=5400 -Q2 where P1 and P2 are the prices for units of storage at peak times and off peak respectively.the variable cost is 200 per unit of storage supplied and capacity costs are 100 per unit. Hence profits fpr the entrepreneurs are given by:(7200-Q1) Q1+ (5400-Q2) Q2 - 200 (Q1+Q2)-100 K where Q1 is less or equal K and Q2 is less or equal Ka) write down the Kuhn-Tucken conditions for this proble. b) Find the optimal outputs and capacity for this problemc) now suppose there is a substancial increqse in capacity costs, which rise to 2000…
Jiffy-Pol Consultants is paid $1,000,000 for each percentage of the vote that Senator Sleaze receives in the upcoming election. Sleaze’s share of the vote is determined by the number of slanderous campaign ads run by Jiffy-Pol according to the function S = 100N/(N + 1), where N is the number of ads. If each ad costs $4,900 approximately how many ads should Jiffy-Pol buy in order to maximize its profits? A) 2,853. B) 1428. C)98 D) 477.
Using the fixed-time period inventory model, and given an average daily demand of 287 units , 4 days between inventory reviews, 5 days for lead time, 141 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 2 units, which of the following is the order quantity?
Exercise 3: Risky Investment Charlie has von Neumann-Morgenstern utility function u(x) = ln x and has wealth W = 250, 000. She is offered the opportunity to purchase a risky project for price P = 160, 000. 1 1 With probability p = 2 the project will be a success and return V > 160, 000. With probability 1 −p = 2 the project will fail and be worthless (i.e. it returns 0). For simplicity assume there is no interest between the time of the investment and the time of its return, that is r = 0 . How large must V be in order for Charlie to want to purchase the risky project? [Hint: What is Charlie’s expected utility is she does not purchase the project? What is Charlie’s expected utility is she purchases the project?]
Let PX denote the price of product X (and likewise for other subscripts); M, the consumers’ income, and AX, the amount invested in advertising for product X (and likewise for other subscripts). If PY = 6; AZ = 50000; PW = 0.5, when graphing the demand function QDX = 3500 – 250PX – 280PY – 0.02AZ, what is the intercept of the Q-axis? Select one below. (A) 566.7667. (B)-13. (C) 820. (D)1050. 2. Imagine the market for Good X has a demand function of QDX = 40 – PX and a supply function of QSX = 2PX – 20. Suppose the current price of Good X (PX) is 30. Calculate consumer surplus (CS). CS = ________ 3. Imagine the tea market has a demand function of QDX = 10 – 2PX and a supply function of QSX = PX − 2, where PX is the price of the tea. Assuming the price is at equilibrium, calculate the equilibrium price (P*). P* = _________ 4. MacGuffins have a demand function of QD = 70 – P and a supply function of QS = 2P + 10. Determine the price at equilibrium PS = _______ 5.…
Consider the online learning problem with demand learning. The firm sells a product without any historical demand information. In each period, the firm can set a price and would observe a demand based on the charged price. Suppose the true demand function in each period is D(p) = 9−3p+ϵ, where ϵ is a random variable with zero mean. The marginal cost is negligible. (a) What price should the firm charge if you know the demand function? What would be the expected revenue if the firm implements this price for n periods? (b) Suppose you do not know the demand function, but know that the demand is a linear function, and the slope is 3. In other words, you know that demand is D(p) = a − 3p + ϵ and would like to estimate a from the data. Suppose from the historical data, you have k pairs of demand and price, i.e., (p1, D1),(p2, D2), ...,(pK, DK). Suppose you would like to minimize the residual sum of square, i.e., min a X K i=1 (Di − a + 3pi) 2 . (1) What would be your best estimate of a?…
Suppose that consumers have utility function U(C) = log(C) where C is the consumption level and log is the natural logarithm. Consumers have initial consumptionlevels of 100 and are exposed to the following risk of loss: lose 10 with probability0.4 and lose 5 with probability 0.6. They are considering buying insurance to coverthese losses. What is the fair price for the insurance?
Q1. A real-estate investor has the opportunity to purchase a small apartment complex. The apartment complex costs $4 million and is expected to generate net revenue (net after all operating and finance costs) of $60,000 per month. Of course, the revenue could vary because the occupancy rate is uncertain. Considering the uncertainty, the revenue could vary from a low of − $10,000 to a high of $100,000 per month. Assume that the investor’ s objective is to maximize the value of the investment at the end of 10 years.a) Do you think the investor should buy the apartment complex or invest the $4 million in a 10-year certificate of deposit earning 9.5%? Why? b)b) The city council is currently considering an application to rezone a nearby empty parcel of land. The owner of that land wants to build a small electronics-assembly plant. The proposed plant does not really conflict with the city’s overall land use plan, but it may have a substantial long-term negative effect on the value of the…
(a) The sales of a book publication are expected to grow according to the functionS = 300000(1 − e−0.06t), where t is the time, given in days.(i) Show using differentiation that the sales never attains an exact maximum value.(ii) What is the limiting value approached by the sales function?(b) A poll commissioned by a politician estimates that t days after he makes a statementdenegrating women,the percentage of his constituency (those who support him at the time hemade the statement) that still supports him is given by S(t) =75(t2 − 3t + 25)t2 + 3t + 25The election is 10 days after he made the statement.(i) If the derivative S’(t) may be thought of as an approval rate, derivate the a functionfor his approval rate.(ii) When was his support at its lowest level?(iii) What was his minimum support level?(iv) Was the approval rate positive or negative on the date of the election?(c) Lara offers 100 autograph bats. If each is priced at p dollars, it is that the demand curvefor the bast will be…
Betty runs a toy store. Each toy costs Betty $4 and sells for $10 (so the gross profit per unit sold is $6). Daily demand varies according to the following table: Demand Probability 90 0.64 100 0.24 110 0.12 At the beginning of every day, Betty replenishes shelves with 100 toys (i.e., there are 100 toys for sale every day). If daily demand is less than 100, an inventory holding cost of $0.10 is charged for each toy that is not sold. However, if daily demand is greater than 100, a stockout occurs, and a shortage cost of $0.90 is charged for each unit of demand that cannot be satisfied. Unsatisfied demand is lost. (a) Set up intervals of random numbers that can be used to simulate daily demand. (b) Sketch a simulation table and perform a simulation for 9 days. Use the random numbers 0.76, 0.26, 0.77, 0.57, 0.87, 0.35, 0.50, 0.56, and 0.90 to generate simulated values for daily demand for those 9 days. Based on this sample of 9 days, what is the average daily net profit and service level…
The economic analysis division of Mapco Enterprises has estimated the demand function for its line of weed trimmers as QD=18,000+0.4N350PM+90Ps where N=numberofnewhomescompletedintheprimarymarketarea PM=priceoftheMapcotrimmerPS=priceofitscompetitorsSurefiretrimmer In 2010, 15,000 new homes are expected to be completed in the primary market area. Mapco plans to charge $50 for its trimmer. The Surefire trimmer is expected to sell for $55. What sales are forecasted for 2010 under these conditions? If its competitor cuts the price of the Surefire trimmer to $50, what effect will this have on Mapcos sales? What effect would a 30 percent reduction in the number of new homes completed have on Mapcos sales (ignore the impact of the price cut of the Surefire trimmer)?