Problem 11-10 You are a newsvendor selling San Pedro Times every morning. Before
ID: 361365 • Letter: P
Question
Problem 11-10 You are a newsvendor selling San Pedro Times every morning. Before you get to work, you go to the printer and buy the day's paper for $0.30 a copy. You sell a copy of San Pedro Times for $1.50. Daily demand is distributed normally with mean - 285 and standard deviation 57. At the end of each morning, any leftover copies are worthless and they go to a recycle bin a. How many copies o San Pedro T mes should you buy each morning? answer to the nearest whole number.) Use Excel's NOR unction to find the correct critical vaue or e given le e . Round your z-value to SIN dec mal places and a Optimal order quantity b. Based on a, what is the probability that you will run out of stock? (Round your answer to the nearest whole number.) Probability 9%Explanation / Answer
Answer (a)
For this newspaper , following are the ifformation
Cost of the News paper = $ 0.30
Selling Price of The New paper = $ 1.50
Salvage Cost = $ 0 (it will go to recycle)
Cost of Invetory = $ 0
We need to find Co (Cost of overgae) & Cu (cost of underage)
Cu = Selling Price - Cost = $1.50 - $ 0.30 = $1.20
Co = Cost - Salvage cost + Inventory cost = $ 0.30 - $ 0 + $ 0 = $ 0.30
We get Cu= $ 1.20 & Co= $ 0.30
F (Q) = Cu / (Cu+Co)
F (Q) = 1.20 / (1.20+0.30)
F (Q) = 1.20 / (1.50)
F (Q) = 0.800 for this we need to find the vale of z from Normal distribution table
So for F(Q) = 0.800 , then z = 0.84 (from Normal distribution table)
Now we need to calculate Q* = The optimum order quantity as below
Q* = Standard Deviation X z + Mean
Q* = 57 X 0.84 + 285
Q* = 47.88 + 285
Q* = 332.88 =333 (round figure)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.