Demand for jelly doughnuts on Saturdays at Don\'s Doughnut Shoppe is shown in th
ID: 329673 • Letter: D
Question
Demand for jelly doughnuts on Saturdays at Don's Doughnut Shoppe is shown in the following table. Demand Relative Demand Relative (dozens) Frequency (dozens) Frequency .10 19 20 21 .01 .05 .12 .18 .13 .14 25 26 27 28 29 9 .10 .04 23 24 estimated to be $2.85 per dozen, doughnuts are sold for $4.80 per dozen, and leftover doughnuts at the end of each day are sold the next day at half price. (Round your answer to the nearest whole number.) a-1. Determine the optimal number of doughnuts, in dozens, to stock if labor, materials, and overhead are Optimal number of doughnuts a-2. What is the resulting service level? (Round your answer to 2 decimal places.) Service levelExplanation / Answer
Ce = Cost per unit- Salvage value per unit
=$ 3.20-2.40= $ 0.80 per dozen
Cs = Revenue per unit-Cost per unit
=$ 4.80-$ 3.20=$ 1.60 per dozen
Service level = Cs/(Cs+Ce) = 1.60/(1.60+0.80)=0.67
Service level = 0.67
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Demand (Dozen)
Relative Freq.
Cumulative Freq.
19
0.01
0.01
20
0.05
0.06
21
0.12
0.18
22
0.18
0.36
23
0.13
0.49
24
0.14
0.63
25
0.10
0.73
26
0.11
0.84
27
0.10
0.94
28
0.04
0.98
29
0.02
1.00
we can see that the service level lies between the cumulative probabilities of 0.63 (24) and 0.73 (25), this means that Don should stock 25 dozen doughnuts because 0.67 is closer to 0.73.
Optimal number of doughnuts = 25 dozens
Demand (Dozen)
Relative Freq.
Cumulative Freq.
19
0.01
0.01
20
0.05
0.06
21
0.12
0.18
22
0.18
0.36
23
0.13
0.49
24
0.14
0.63
25
0.10
0.73
26
0.11
0.84
27
0.10
0.94
28
0.04
0.98
29
0.02
1.00
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