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The Lake Nocee Department Store has an opportunity to purchase a-(Answered)

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Question

  • 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 40thanniversary 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 40thanniversary, 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

5????????????????????????????????? 0.10

6????????? ??????????????????????? 0.15

7????????????????????????????????? 0.25

8????????????????????????????????? 0.20

9????????????????????????????????? 0.15

10??????? ??????????????????????? 0.10

11??????????????????????????????? 0.05

12??????????????????????????????? 0

Determine the optimal order quantity for Nocee regarding this item.




The optimal order quantity is where the expected demand is maximum. For the given demand distribution if

 

the amount ordered is 8 dozens then the expected profit will be =sum(probability of each...

 

Paper#9209292 | Written in 27-Jul-2016

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