1) The Richman shop of elephant road branch wants to decide how many men's shirts to...

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1) The Richman shop of elephant road branch wants to decide how many men's shirts to order for coming Eid festival in 2022. For a particular type of shirts, the Richman must order of lots of 50. If it orders 50 shirts, cost per unit is TK 1000, if it orders 100 shirts, cost per unit is TK 800 and if it orders 150 shirts or more shirts, the cost is TK 900 per shirt. Richman's selling price per shirt is TK 1500 but any leftover at the end of Eid festival will be sold at 50% discount on its selling price. It is assumed that the demand will be either 50, 100, 150, 200 or 250 shirts and the shop will not suffer any loss of goodwill if it runs out of stock. It must place the entire order for the festival at the beginning with no opportunity reordering. Richman has estimated the probability of demand as follows Demand 50 100 150 200 250 No. of Days 15 25 30 20 10 (i) Determine the quantity that Richman should order to maximize his profit. (ii) Calculate the expected value of perfect information. (iii) What is the maximum amount that Richman can pay under perfect information? 1) The Richman shop of elephant road branch wants to decide how many men's shirts to order for coming Eid festival in 2022. For a particular type of shirts, the Richman must order of lots of 50. If it orders 50 shirts, cost per unit is TK 1000, if it orders 100 shirts, cost per unit is TK 800 and if it orders 150 shirts or more shirts, the cost is TK 900 per shirt. Richman's selling price per shirt is TK 1500 but any leftover at the end of Eid festival will be sold at 50% discount on its selling price. It is assumed that the demand will be either 50, 100, 150, 200 or 250 shirts and the shop will not suffer any loss of goodwill if it runs out of stock. It must place the entire order for the festival at the beginning with no opportunity reordering. Richman has estimated the probability of demand as follows Demand 50 100 150 200 250 No. of Days 15 25 30 20 10 (i) Determine the quantity that Richman should order to maximize his profit. (ii) Calculate the expected value of perfect information. (iii) What is the maximum amount that Richman can pay under perfect information?

Answer rating: 100% (QA)

To determine the quantity of shirts that Richman should order to maximize profit we need to calculate the expected profit for each possible order quan... View the full answer