Problem 13-34 Demand for jelly doughnuts on Saturdays at Don\'s Doughnut Shoppe
ID: 333903 • Letter: P
Question
Problem 13-34 Demand for jelly doughnuts on Saturdays at Don's Doughnut Shoppe Is shown In the following table. Denand Relative (dozens) Frequency (dozens) Frequency Denand Relative 19 21 23 01 05 .12 18 25 18 27 28 29 18 84 02 24 14 a-1. Determine the optimal number of doughnuts, In dozens, to stock if labor, materlals, and overhead are estimated to be $3.20 per dozen, doughnuts are sold for $4.80 per dozen, and leftover doughnuts at the end of each day are sold the next day at half price. Round your answer to the nearest whole number.) Optimal number of doughnuts a-2 what is the resulting service level? (Round your answer to 2 decimal places.) Service levelExplanation / Answer
(a) Ce = Cost per unit- Salvage value per unit
=$ 3.20-2.40= $ 0.80 per dozen
Cs = Revenue per unit-Cost per unit
=$ 4.80-$ 3.20=$ 1.60 per dozen
Therefore, Service level = Cs/(Cs+Ce) = 1.60/(1.60+0.80)=0.67
Now let us calculate the optimal number of doughnuts to stock-
Demand (Dozen)
Relative Freq.
Cumulative Freq.
19
0.01
0.01
20
0.05
0.06
21
0.12
0.18
22
0.18
0.36
23
0.13
0.49
24
0.14
0.63
25
0.10
0.73
26
0.11
0.84
27
0.10
0.94
28
0.04
0.98
29
0.02
1.00
Since the service level falls between the cumulative probabilities of 0.63 (24) and 0.73 (25), this means that the company should stock 25 dozen doughnuts because 0.67 is closer to 0.73.
Demand (Dozen)
Relative Freq.
Cumulative Freq.
19
0.01
0.01
20
0.05
0.06
21
0.12
0.18
22
0.18
0.36
23
0.13
0.49
24
0.14
0.63
25
0.10
0.73
26
0.11
0.84
27
0.10
0.94
28
0.04
0.98
29
0.02
1.00