Terry is in charge of the office “treat” basket. Workers pay for their treats th
ID: 382930 • Letter: T
Question
Terry is in charge of the office “treat” basket. Workers pay for their treats through a token system. Tokens are worth $1.00. These tokens are part of a worker reward system. The treats costs Terry $0.60 to supply. Any treats not “purchased” with a token are thrown away at the end of the day. (They are too old and stale to be given away.) Terry was always purchasing the same number of treats each morning, but found that too many were being thrown away. The boss came to Terry with the following proposition. If s/he could get the ordering under control, s/he could keep any profit, redeemable in tokens, of course. Terry collected the following data on demand:
Please show your work. Thank you.
Terry is in charge of the office "treat" basket. Workers pay for their treats through a token system. Tokens are worth $1.00. These tokens are part of a worker reward system. The treats costs Terry $0.60 to supply. Any treats not purchased" with a token are thrown away at the end of the day. (They are too old and stale to be given away.) Terry was always purchasing the same number of treats each morning, but found that too many were being thrown away. The boss came to Terry with the following proposition. If s/he could get the ordering under control, s/he could keep any pront, redeemable in tokens, of course. Terry collected the following data on demand: Demand (Treats) 50 150 200 Probability 45 .30 25 Terry chose to use the "newsvendor" model to determine a better ordering policy If Terry ordered 200 on a particular day but only 50 were "purchased", how much would Terry's profit/loss be for that day? Express with two decimal places. Include a negative sign if needed, but not the dollar sign How many should Terry to maximize her profit? Express as a whole number. How much profit will Terry receive with that purchase quantity? Express with two decimal places. Include a negative sign if needed, but not the dollar sign.Explanation / Answer
1.
Cost of 200 treats = 0.6 *200 = $120
Treats Purchased = 50
Money recovered = 1 *50 = $50
Total loss = $70
2.
To maximize profit,
Order quantity = 50*0.45 + 150*0.3 + 200*0.25 = 117.5 ~ 118 treats
3.
Cost of 118 treats = 0.6 *118 = $70.8
Treats Purchased = 50
Money recovered = 1 *50 = $50
Total profit = -20.8
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.