Please show how to answer d) 27. The Loebuck Grocery must decide how many cases of milk to stock each week to meet demand.The probability distribution of demand during a week is shown in the following table:Demand (cases)561817Probability.202540.151.00Each case costs the grocer $10 and sells for $12. Unsold cases are sold to a local farmer (whomixes the milk with feed for livestock) for $2 per case. If there is a shortage, the grocer consid-ers the cost of customer ill will and lost profit to be $4 per case. The grocer must decide howmany cases of milk to order each week.a. Construct the payoff table for this decision situation.b. Compute the expected value of each alternative amount of milk that could bestocked and select the best decision.c. Construct the opportunity loss table and determine the best decision.d. Compute the expected value of perfect information.

Find the Given details below: Given details: Demand (Cases) Probability 15 0.2 16 0.25 17…

Answered: The Loebuck Grocery must decide how…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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A new edition of a very popular textbook will be published a year from now. The publisher currently has 1000 copies on hand and is deciding whether to do another printing before the new edition comes out. The publisher estimates that demand for the book during the next year is governed by the probability distribution in the file P10_31.xlsx. A production run incurs a fixed cost of 15,000 plus a variable cost of 20 per book printed. Books are sold for 190 per book. Any demand that cannot be met incurs a penalty cost of 30 per book, due to loss of goodwill. Up to 1000 of any leftover books can be sold to Barnes and Noble for 45 per book. The publisher is interested in maximizing expected profit. The following print-run sizes are under consideration: 0 (no production run) to 16,000 in increments of 2000. What decision would you recommend? Use simulation with 1000 replications. For your optimal decision, the publisher can be 90% certain that the actual profit associated with remaining sales of the current edition will be between what two values?
Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year. If the company builds a plant that can produce x units of Wozac per year, it will cost 16x. Each unit of Wozac is sold for 3. Each unit of Wozac produced incurs a variable production cost of 0.20. It costs 0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.

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