A deli shop serves very popular hot and spicy pies every day. The cost of making...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A deli shop serves very popular hot and spicy pies every day. The cost of making each pie is $3.50, and these are sold for $5.00 each. Unsold pies at the end of the day are offered for quick sale for $1.00 each, and these are always sold out. Past daily sales of the pies have been recorded using the frequency distribution as below. Demand Probability 200 100 150 0.1 0.15 0.25 250 300 0.2 0.15 350 0.1 400 0.05 Answer the following questions, and show the calculations clearly: a. Construct a table to calculate the expected profits or losses for the pies based on each demand quantity in order to determine the optimal quantity of pies that the deli shop should make each day. For confirmation purpose, calculate the expected profit or loss for a quantity of pies between 100 and 400 units where the last two digits of the quantity are based on the last two digits of your student ID, and take the quantity that is closest to the optimal quantity of the pies that you have found. For example, if the optimal quantity of pies that you find is 300, and the last two digits of your student ID are 46, you need to calculate the expected profit of 346 pies. If the last two digits of your student ID are 00, you need to use 99 as the last two digits of the quantity of pies. Based on the example, it will be 299 pies b. Apply full marginal analysis based on the costs of overestimating and underestimating demands of the pies based on each demand quantity in order to determine the optimal quantity of pies that the deli shop should make each day. Also, calculate the costs of overestimating and underestimating demand of the quantity of pies that you use for confirmation purpose in sub-question a). c. What is the minimum price should the deli shop set for the pies so that by selling 250 units each day it will make the highest expected profit? Explain your answer. A deli shop serves very popular hot and spicy pies every day. The cost of making each pie is $3.50, and these are sold for $5.00 each. Unsold pies at the end of the day are offered for quick sale for $1.00 each, and these are always sold out. Past daily sales of the pies have been recorded using the frequency distribution as below. Demand Probability 200 100 150 0.1 0.15 0.25 250 300 0.2 0.15 350 0.1 400 0.05 Answer the following questions, and show the calculations clearly: a. Construct a table to calculate the expected profits or losses for the pies based on each demand quantity in order to determine the optimal quantity of pies that the deli shop should make each day. For confirmation purpose, calculate the expected profit or loss for a quantity of pies between 100 and 400 units where the last two digits of the quantity are based on the last two digits of your student ID, and take the quantity that is closest to the optimal quantity of the pies that you have found. For example, if the optimal quantity of pies that you find is 300, and the last two digits of your student ID are 46, you need to calculate the expected profit of 346 pies. If the last two digits of your student ID are 00, you need to use 99 as the last two digits of the quantity of pies. Based on the example, it will be 299 pies b. Apply full marginal analysis based on the costs of overestimating and underestimating demands of the pies based on each demand quantity in order to determine the optimal quantity of pies that the deli shop should make each day. Also, calculate the costs of overestimating and underestimating demand of the quantity of pies that you use for confirmation purpose in sub-question a). c. What is the minimum price should the deli shop set for the pies so that by selling 250 units each day it will make the highest expected profit? Explain your answer.
Expert Answer:
Answer rating: 100% (QA)
a Table to calculate expected profits for different demand quantities 1 List down the different dema... View the full answer
Related Book For
Posted Date:
Students also viewed these general management questions
-
A bank has approved $300k loan for A Corp of which $20k is currently outstanding. ABC has very little collateral so the. bank has estimated 6% of default on the loan with loss rate equal to 60%....
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
JD is a 25 year old patient who sustained massive head trauma and neurological injury in a motorcycle accident. He is not brain dead, but after 4 weeks in MICU and several neuro consults, the...
-
Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: Determine...
-
The Great North Woods Clothing Company sells specialty outdoor clothing through its catalogue. A quality problem that generates customer complaints occurs when a warehouse employee fills an order...
-
SAS No. 99 gives what ways assets may be misappropriated?
-
The ledger of Perez Rental Agency on March 31 of the current year includes the selected accounts, shown below, before adjusting entries have been prepared. An analysis of the accounts shows the...
-
Tax Return #3 Fact Pattern Name: Magdalena Schmitz has undergone some major changes in her life recently. In 2016, at the age of 46, her husband, Roger, passed away. Magdalena has not remarried as of...
-
Consider the following context-free grammar of expressions E ::= n | (E, E) where n ranges over integers. (a) Present a right-most derivation of the expression ((21, 18), 17). [2 marks] (b) List the...
-
USE R. Compute the summary statistics (mean, median, standard deviation, variance, range) for the Inflation-Adjusted Budget variable in the dataset. Use a table to display all these summary measures...
-
Alex feels sick, so he walks to Vanderbilt\'s Student Healthcarecenter. The nurse proceeds to identify some unusual symptomsappearing on Alex\'s body. During the nurse\'s questioning, Alexremarks...
-
All amounts are in New Zealand dollars and GST - exclusive unless otherwise stated. Please answer following question following NZ tax law. Noodle Nation Limited ( NNL ) is a New Zealand tax resident...
-
If an interest rate used for a NPV analysis of a capital investment project decreased, but all the other factors stayed the same, its NPV would a) decrease b) increase c) might change but more data...
-
1) On January 1, 2024 Shelby Corporation issued 5000 shares, $50 Par, 10% Preferred stock and 20,000 shares, $10 Par, Common stock. On the day of issue the market price of the preferred stock is $30...
-
What vitamin is synthesized by the skin? Explain why thisvitamin is critical for various physiological processes.
-
A 5 m long steel bar with a cross-sectional area of 0.01 m 2 is connected to a spring as shown. The spring has a stiffness of 2108 N/m and is initially undeformed. The bar is fixed at its base. The...
-
Find a least expensive route, in monthly lease charges, between the pairs of computer centers in Exercise 11 using the lease charges given in Figure 2. a) Boston and Los Angeles b) New York and San...
-
Ron LaTulip oversees projects for ACE Construction Company-Recently, the companys controller sent him a performance report regarding the construction of the Campus Highlands Apartment Complex, a...
-
At the end of first three months of operation, the trial balance of City Answering Service appears as shown below. Tim Bass, the owner of City Answering Service, has hired an accountant to prepare...
-
Zelolo Corp. has the following capital investment requests pending from its three divisions: Request 1, $60,000, 11 percent projected return; Request 2, $110,000, 14 percent projected return; Request...
-
1. Brockwell left his boat to be repaired at Lake Gaston Sales. The boat contained electronic equipment and other personal items. Brockwell signed a form stating that Lake Gaston had no...
-
2. Guyan Machinery, a West Virginia manufacturing corporation, hired Albert Voorhees as a salesman and required him to sign a contract stating that if he left Guyan he would not work for a competing...
-
4. The McAllisters had several serious problems with their house, including leaks in the ceiling, a buckling wall, and dampness throughout. They repaired the buckling wall by installing I-beams to...
Study smarter with the SolutionInn App