You work as a clerk at Bakery, a Malaysian bakery specialized in using tropical fruits in their
Question:
You work as a clerk at Bakery, a Malaysian bakery specialized in using tropical fruits in their pastries. Gary Rivera, the chef baker, wants to introduce a new pastry, durian cream puffs. Introducing this new pastry creates a new inventory problem for the bakery because durians have a strong smell and cannot be stored overnight in the fridge, lest they will ruin the taste of all the other food in the fridge. The durian cream would have to be ordered fresh daily.
Durian cream is purchased in pounds at RM 4.6 /lb (RM is the currency in Malaysia, and RM stands for Malaysian Ringgit). Gary predicts the demand will be 42 lbs of durian cream on average with a standard deviation of 3.36 lbs per day. You may assume that the demand is normally distributed. You estimate that each pound of durian cream will be sold at RM 12.88/lb.
How many pounds of durian cream should you order if you wish to maximize profitability?
Round your answer to two decimal places.
Answer -
What service level does your answer correspond to?
Answer as a percentage with two decimals, without the percentage symbol. For instance, if your solution is 95.554%, you answer is 95.55.
Answer -
Part 2
With your suggested order quantity from Part 1, how many pounds of durian cream can you expect to be short on a regular day?
Round your answer to three decimal places.
Answer -
What is the expected profit (in RM) with your suggested order quantity?
Round your answer to the nearest integer.
Answer -
Part 3
The current order quantity and service level seems low. You wonder what the new order quantity would be if you increased the service level to 95%.
How many pounds of durian cream should you order to have a service level of 95%?
Round your answer to two decimal places.
Answer -
With this order quantity, how many pounds of durian cream can you expect to be short on a regular day?
Round your answer to three decimal places.
Answer -
What is the expected profit (in RM) with this order quantity?
Round your answer to the nearest integer.
Answer -
Part 4
Your customers love the durian cream puffs! The bakery made a lot of publicity and these puffs have become the flagship product of Bakery #492. Gary Rivera, the chef baker, worries that the durian puffs will stock out too quickly and this will affect the store's reputation. So he asked you to order 46 pounds (lbs) of durian cream daily. The puff can be made with ingredients that are well stocked at the bakery, so there is no need to worry about that.
What service level does the order size proposed by the chef correspond to?
Answer as a percentage with two decimals, without the percentage symbol. For instance, if your solution is 95.554%, you answer 95.55.
Answer -
How much does the chef value the additional cost per stock out (the penalty for not satisfying demand) per pound of durian cream?
Round your answer to two decimal places.
Answer -
Accounting Information Systems
ISBN: 978-1260153156
2nd edition
Authors: Vernon Richardson, Chengyee Chang, Rod Smith