Demand for jelly doughnuts on Saturdays at Don\'s Doughnut Shoppe is shown in th

Question

Demand for jelly doughnuts on Saturdays at Don's Doughnut Shoppe is shown in the following table Demand RelativeDemand Relative (dozens) Frequency (dozens) Frequency 01 05 12 18 13 14 25 26 27 28 29 10 19 20 21 10 04 02 23 a-1. Determine the optimal number of doughnuts, in dozens, to stock if labor, materials, and overhead are estimated to be $3.55 per dozen, doughnuts are sold for $4.90 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.) Optimal number of doughnuts a-2. What is the resulting service level? (Round your answer to 2 decimal places.) Service level

Explanation / Answer

Overage cost Co= Cost - Salvage cost =3.55 - 2.45 = 1.1

Underage cost Cu = Selling price -Cost = 4.90 - 3.55 = 1.35

P = Cu / (Cu + Co) = 1.35/(1.35+1.1) = 0.55

Cummulative relative frequency is 0.49 at 23 dozens

a-1) Optimal number of doughnuts = 23

a-2) Resulting service level = 49%

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