Soup4U is a restaurant that sells soup. Soup4U makes production decisions using the newsvendor model. Each bowl of soup costs the store a total of $2 to make. Soup4U sells eachbowl of soup to its customers at $4.50 a bowl. Any left over bowls of soup will be donated toa soup kitchen for free. If Soup4U were to use the news vendor model to make an optímalproduction decision what would their service level be? (Round your answer to two decimalplaces.)23%44%O 56%80%None of the other answers are within 1% of correct0. 0

A news vendor model is one of the core concepts in the supply chain and inventory management. Given,…

Answered: Soup4U is a restaurant that sells soup.…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter7: Nonlinear Optimization Models

Section: Chapter Questions

Problem 45P

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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.
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?
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%.
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?
In Problem 12 of the previous section, suppose that the demand for cars is normally distributed with mean 100 and standard deviation 15. Use @RISK to determine the best order quantityin this case, the one with the largest mean profit. Using the statistics and/or graphs from @RISK, discuss whether this order quantity would be considered best by the car dealer. (The point is that a decision maker can use more than just mean profit in making a decision.)
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. Can you guess the results of a sensitivity analysis on the initial inventory in the Pigskin model? See if your guess is correct by using SolverTable and allowing the initial inventory to vary from 0 to 10,000 in increments of 1000. Keep track of the values in the decision variable cells and the objective cell.
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?
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.)
PROBLEM The management of the Book Warehouse Company wishes to apply the Miller-Orr model to manage its cash investment. They have determined that the cost of either investing in or selling marketable securities is $100. By looking at Book Warehouse’s past cash needs, they have determined that the variance of daily cash flows is $20,000. Book Warehouse’s opportunity cost of cash, per day, is estimated to be 0.03%. Based on experience, management has determined that the cash balance should never fall below $10,000. 1. How much is the cost per transaction?(Use a number, no decimal value, no commas, no currency, no space) * 2. How much is the return point based on the Miller-Orr model of cash management? (Use a number, no decimal value, no commas, no currency, no space) * 3. How much is the upper limit based on the Miller-Orr model of cash management?(Use a number, no decimal value, no commas, no currency, no space) * PLEASE ANSWER ALL QUESTIONS. THANKS!
A retired couple supplement their income by making fruit pies, which they sell to a local grocery store. During the month of September, they produce apple and grape pies. The apple pies are sold for $10.00 to the grocer, and the grape pies are sold for $8.00. The couple is able to sell all of the pies they produce owing to their high quality. They use fresh ingredients. Flour and sugar are purchased once each month. For the month of September, they have 1,500 cups of sugar and 2,400 cups of flour. Each apple pie requires 1½ cups of sugar and 3 cups of flour, and each grape pie requires 2 cups of sugar and 3 cups of flour. a. Determine the number of grape and the number of apple pies that will maximize revenues if the couple working together can make an apple pie in 6 minutes and a grape pie in 3 minutes. They plan to work no more than 60 hours. (Round your answers to nearest whole number.) b. Determine the amounts of sugar, flour, and time that will be unused. (Leave no cells blank -…
1. At the beginning of each semester, BOOKY can order 60, 80, or 100 copies of the book from the publisher, each with differing discounts per book. The ordering costs are listed in the following table. Number of Books Ordered 60 80 100 Ordering Costs 6100 7700 9100 2. BOOKY can either sell the book at the retail price ($130 per copy) or offer a 10% discount ($117 per copy). The demand distributions under different selling prices are listed in the following tables. The demand distribution for the textbook when the selling price is $130 per copy. Demand Probability 70 0.6 90 0.4 The demand distribution for the textbook when the selling price is $117 per copy. Demand Probability 80 0.15 100 0.85 3. Any unmet demand for the textbook will be irrecoverable There are two decision variables in this decision problem: the ordering quantity and the selling price of the textbook. a) If BOOKY is allowed to return unsold textbooks to the publisher for a refund of…

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