Target sells a popular model of pre-lit artificial Christmas trees during the holiday season. The total procurement cost per unit is $70, and the selling price is $120. At this price, the anticipated demand during the selling season is normally distributed, with a mean of 900 units and standard deviation of 200 units. Any unsold units at the end of the season will be disposed of in a postseason sale for $55. It costs $25 to hold a unit in inventory for the entire season. Round all entries to two decimal places. a) Compute the optimal number of units Target should order: units. b) Compute the optimal expected profit associated with the order quantity from part (a): $ c) Given the optimal order quantity, how many customers does Target expect to turn away because of stocking out? units.
Target sells a popular model of pre-lit artificial Christmas trees during the holiday season. The total procurement cost per unit is $70, and the selling price is $120. At this price, the anticipated demand during the selling season is normally distributed, with a mean of 900 units and standard deviation of 200 units. Any unsold units at the end of the season will be disposed of in a postseason sale for $55. It costs $25 to hold a unit in inventory for the entire season. Round all entries to two decimal places. a) Compute the optimal number of units Target should order: units. b) Compute the optimal expected profit associated with the order quantity from part (a): $ c) Given the optimal order quantity, how many customers does Target expect to turn away because of stocking out? units.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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