Problem 14-27 (Algorithmic) A perishable dairy product is ordered daily at a par
ID: 337325 • Letter: P
Question
Problem 14-27 (Algorithmic) A perishable dairy product is ordered daily at a particular supermarket. The product, which costs $1.2 per unit, sells for $1.64 per unit. If units are unsold at the end of the day, the supplier takes them back at a rebate of $1 per unit. Assume that daily demand is approximately normally distributed with µ = 145 and ? = 30. What is your recommended daily order quantity for the supermarket? If required, round your answer to two decimal places. Q* = What is the probability that the supermarket will sell all the units it orders? If required, round your answer to four decimal places. P(Stockout) = In problems such as these, why would the supplier offer a rebate as high as $$1? For example, why not offer a nominal rebate of, say, 25¢ per unit? What happens to the supermarket order quantity as the rebate is reduced? The higher rebate the quantity that the supermarket should order.
Explanation / Answer
Problem 14-27 (Algorithmic) A perishable dairy product is ordered daily at a particular supermarket. The product, which costs $1.2 per unit, sells for $1.64 per unit. If units are unsold at the end of the day, the supplier takes them back at a rebate of $1 per unit. Assume that daily demand is approximately normally distributed with µ = 145 and ? = 30. What is your recommended daily order quantity for the supermarket? If required, round your answer to two decimal places. Q* = What is the probability that the supermarket will sell all the units it orders? If required, round your answer to four decimal places. P(Stockout) = In problems such as these, why would the supplier offer a rebate as high as $$1? For example, why not offer a nominal rebate of, say, 25¢ per unit? What happens to the supermarket order quantity as the rebate is reduced? The higher rebate the quantity that the supermarket should order.