A shop is planning an order for a popular Christmas festive season product. Demand for the product
Question:
A shop is planning an order for a popular Christmas festive season product. Demand for the product usually starts from first week of December till first week of January and reduces sharply thereafter. For this reason, and to stimulate sales for leftovers, the product is sold at a significantly reduced price from the second week of January to the fourth week of January. Any leftover after the fourth week of January goes waste. The table below gives past data on total demand for the period from first week of December to first week of January, and from second week of January to fourth week of January, together with their respective chances of occurrence. The product can be purchased at a wholesale price of GHS60 per unit for a pack containing 600 products, GHS57 per unit for a pack containing 800 products, and GHS52 per unit for a pack containing 1000 products. The shop plans to sell the product for GHS80 per unit from first week of December to first week of January, and at a reduced price of 30% thereafter.
What is the expected profit when a pack containing 600, 800 and 1000 products is ordered?
Operations Management in the Supply Chain Decisions and Cases
ISBN: 978-0073525242
6th edition
Authors: Roger Schroeder, M. Johnny Rungtusanatham, Susan Goldstein