Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Chapter 10.5, Problem 19P
In Problem 12 of the previous section, suppose that the demand for cars is
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A book and paper store distributes one specialized monthly magazine. When looking at the sales the last years, they have concluded that the demand for each issue of the magazine will be normally distributed with an expected sale of 250 and a standard deviation of 100. The purchase price for the magazine is $20. and the sales price is $50.The store has an agreement with a second -hand store that buys unsold magazines for $5 each. How many magazines should the store buy of each issue?
15) JBs needs to determine what quantity of a new tennis racquet to order for the upcoming summer
season. They sell the racquet for $110 and procure it from their supplier for $70. Any leftovers
will be marked down 60% and are expected to all sell at that price. Anticipated demand is
modeled with a normal distribution where the mean is 120 and the standard deviation is 25. How
many racquets should JBs order if they want to meet a 95% target fill rate?
A) 130
C) 162
B) 127
D) 149
13
Pam’s demand for hats is normally distributed with mean 500 and standard deviation 100. She sells her hats for $50 each and buys hats for $10 each, and anything she can't sell by the end of the year, the wholesaler will buy for $5 each. How many hats should she order for next year to maximize profit?
Chapter 10 Solutions
Practical Management Science
Ch. 10.2 - Use the RAND function and the Copy command to...Ch. 10.2 - Use Excels functions (not @RISK) to generate 1000...Ch. 10.2 - Use @RISK to draw a uniform distribution from 400...Ch. 10.2 - Use @RISK to draw a normal distribution with mean...Ch. 10.2 - Use @RISK to draw a triangular distribution with...Ch. 10.2 - Use @RISK to draw a binomial distribution that...Ch. 10.2 - Use @RISK to draw a triangular distribution with...Ch. 10.2 - We all hate to keep track of small change. By...Ch. 10.4 - Prob. 11PCh. 10.4 - In August of the current year, a car dealer is...
Ch. 10.4 - Prob. 13PCh. 10.4 - Prob. 14PCh. 10.4 - Prob. 15PCh. 10.5 - If you add several normally distributed random...Ch. 10.5 - In Problem 11 from the previous section, we stated...Ch. 10.5 - Continuing the previous problem, assume, as in...Ch. 10.5 - In Problem 12 of the previous section, suppose...Ch. 10.5 - Use @RISK to analyze the sweatshirt situation in...Ch. 10.5 - Although the normal distribution is a reasonable...Ch. 10.6 - When you use @RISKs correlation feature to...Ch. 10.6 - Prob. 24PCh. 10.6 - Prob. 25PCh. 10.6 - Prob. 28PCh. 10 - Six months before its annual convention, the...Ch. 10 - Prob. 30PCh. 10 - A new edition of a very popular textbook will be...Ch. 10 - Prob. 32PCh. 10 - W. L. Brown, a direct marketer of womens clothing,...Ch. 10 - Assume that all of a companys job applicants must...Ch. 10 - Lemingtons is trying to determine how many Jean...Ch. 10 - Dilberts Department Store is trying to determine...Ch. 10 - It is surprising (but true) that if 23 people are...Ch. 10 - Prob. 40PCh. 10 - At the beginning of each week, a machine is in one...Ch. 10 - Simulation can be used to illustrate a number of...Ch. 10 - Prob. 43PCh. 10 - Prob. 46PCh. 10 - If you want to replicate the results of a...Ch. 10 - Suppose you simulate a gambling situation where...Ch. 10 - Prob. 49PCh. 10 - Big Hit Video must determine how many copies of a...Ch. 10 - Prob. 51PCh. 10 - Prob. 52PCh. 10 - Why is the RISKCORRMAT function necessary? How...Ch. 10 - Consider the claim that normally distributed...Ch. 10 - Prob. 55PCh. 10 - When you use a RISKSIMTABLE function for a...Ch. 10 - Consider a situation where there is a cost that is...
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- When you use a RISKSIMTABLE function for a decision variable, such as the order quantity in the Walton model, explain how this provides a fair comparison across the different values tested.arrow_forwardA distributor of large appliances needs to determine the order quantities and reorderpoints for the various products it carries. The following data refer to a specii c refrigeratorin its product line:Cost to place an orderHolding costCost of refrigeratorAnnual demandStandard deviation of demand during lead timeLead time$10020 percent of product cost per year$500 each500 refrigerators10 refrigerators7 daysConsider an even daily demand and a 365-day year.a. What is the economic order quantity?b. If the distributor wants a 97 percent service probability, what reorder point, R, shouldbe used?arrow_forwardSuppose that the manager of a construction supply house determined from historical recordsthat demand for sand during lead time averages 50 tons. In addition, suppose the managerdetermined that demand during lead time could be described by a normal distribution thathas a mean of 50 tons and a standard deviation of 5 tons. Answer these questions, assumingthat the manager is willing to accept a stockout risk of no more than 3 percent:a. What value of z is appropriate?arrow_forward
- Green Thumb, a manufacturer of lawn care equipment has introduced a new product. Each unit cost $150 to manufacture, and the introductory price is to be $200. At this price, the anticipated demand is normally distributed, with a mean of 100 and a standard deviation of 40. Any unsold units at the end of the season are unlikely to be very valuable and will be disposed of in a fire sale for $50 each. It costs $20 to hold a unit in inventory for the entire season. How many units should Green Thumb manufacture for sale? What is the cycle service level (probability of not stocking out) associated with this policy? If the holding costs increase, how does this affect the optimal number of units to manufacturer and the cycle service level? *Note you can construct a graph if you preferarrow_forwardGreen Thumb, a manufacturer of lawn care equipment has introduced a new product. Each unit cost $150 to manufacture, and the introductory price is to be $200. At this price, the anticipated demand is normally distributed, with a mean of 100 and a standard deviation of 40. Any unsold units at the end of the season are unlikely to be very valuable and will be disposed of in a fire sale for $50 each. It costs $20 to hold a unit in inventory for the entire season. If the manufacturing costs decrease, how does this affect the optimal number of units to manufacture and the cycle service level? *Note you can construct a graph if you prefer. What is the expected profit from this policy? (Using excel formulas from the text) On average, how many customers does Green Thumb expect to turn away because of stocking out? (hint: computed expected number of units that are understocked).arrow_forward3. Cynthia Knott’s oyster bar buys fresh Louisiana oysters for $5 per pound and sells them for $12 per pound. Any oysters not sold that day are sold to her cousin, who has a nearby grocery store, for $1 per pound. Cynthia believes that demand follows the normal distribution, with a mean of 100 pounds and a standard deviation of 15 pounds. a) What is the cost of underestimating demand for each pound? b) What is the overage cost per pound? c) How many pounds of oyster should she order each day? d) What is the stockout risk for this order size?arrow_forward
- Flora Co sells bunches of fresh flowers which have a limited shelf life so forecasting sales demand is extremely important for maximising profits. Quarter 1 Quarter 1 contains a national holiday and as a result sales of a particular red flower are usually very high. Sales of the red flower will depend on market conditions. After the national holiday there will be no demand for the red flowers and they will be thrown away. Flora Co must decide whether to purchase 250 bunches, 400 bunches or 500 bunches of the red flowers from its supplier for re-sale to its customers. The following payoff table has been produced: Market conditions Poor Good Excellent Expected value Probability 0.20 0.25 0.55 Number of bunches to be bought from supplier 400 $900 $3,900 $3,900 250 $2,400 $2,400 $2,400 $2,400 $3,300 500 ($100) $2,900 $4,900 $3,400arrow_forwardDan's Independent Book Store is trying to decide how many copies of a book to purchase at the start of the upcoming selling season. The book retails at $28.00. The publisher sells the book to Dan at $20.00. Dan will dispose of all of the unsold copies of the book at 50% off the retail price, at the end of the season. Dan estimates that demand for this book during the season is normal with a mean of 1000 and a standard deviation of 250. The publisher is thinking of offering the following scheme to Dan. At the end of the season, they will buy back unsold copies at a pre-determined price of $17.00. However, Dan would have to bear the costs of shipping unsold copies back to the publisher at $1.00 per copy. What is the quantity that Dan should order, to maximize his expected profits?arrow_forwardConsider a toy retailer with warehouses in St. Louis and Kansas City, Missouri. The warehouses stock an identical popular toy delivered to stores in the two cities. Assume a warehouse serves only stores in its city. Weekly demand for St. Louis is normally distributed with mean 2,000, and standard deviation 400 (that is N(μ = 2,000, σ = 400)). Weekly demand for KansasCity is distributed N(μ = 2,000, σ = 300). We assume that the two cities are far enough apart so that demand in the two cities is independent.The following parameters are seen by both warehouses:Replenishment lead time in weeks ~ N(μ = 2, σ = 0.1);Fixed shipping cost of replenishment: $500;Cost per toy: $10; andHolding cost per toy 20 percent of toy’s value per year.How many toys should each location order at a time and when should they reorder if they want a 99 percent cycle service level? What if they pool the two locations?arrow_forward
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