Sally’s Silk Screening produces special T-shirts that are primarily sold on the Halloween day.  She must decide how many to produce for the coming Halloween.  During the event itself, which lasts one day, Sally can sell a T-shirt for $20 a-piece.  However, when the event ends, any unsold T-shirts are sold for $4 a-piece.  It costs Sally $8 to make a specialty T-shirt.  Using Sally’s estimated distribution of demand, how many T-shirts should she produce for the coming event?

 

DEMAND                     Probability        COMPUTE COMULATIVE PROBABILITY

                        300                   .05

400                   .10

500                   .40

600                   .30

700                   .10

800                   .05                                           

Hint:  What is the optimal service level? What is the cumulative probability distribution?                          

 

 

 

 

 

 

 

• The Lake Nocee Department Store has an opportunity to purchase a special shipment of  X-mas tableware at $28 a set.  These sets of tableware are to be sold for $35 as a special promotion during the store’s 40^thanniversary sale.  Nocee must purchase the items in units of a dozen sets.  Tableware is not part of the store’s normal product lines, so if items are not sold during the X-mas cum 40^th anniversary, they will be sold in the Bargain Basement for $22.20 per set.  A sales consultant has estimated the following distribution of demand.

 

Demand (Dozens)           Probability

4 or less                                 0

0.10

0.15

0.25

0.20

0.15

0.10

0.05

0

 

Determine the optimal order quantity for Nocee regarding this item.

                                                          

SophiaPretty

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Status NEW Posted 06 Sep 2017 05:09 AM My Price 8.00

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