A deli shop serves very popular hot and spicy pies every day. The cost of making...

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.

Answer rating: 100% (QA)

a Table to calculate expected profits for different demand quantities 1 List down the different dema... View the full answer