All information given Not looking for max F(q) with random numbers that are not given in question A store will order q gallons of a liquid product to meet demand during a partic ular time period This product can be dispensed to customers in any amount desired, so demand during the period is a continuous random variable X with cdf F(a) There is a fixed cost co for ordering the product plus a cost of c1 per gallon purchased The per gallon sale price of the product is d Liquid left un sold at the end of the time period has a salvage value of e per gallon Finally, if demand exceeds q, there will be a shortage cost for loss of goodwill and future business this cost is f per gallon of unfulfilled demand How can we estimate q that maximizes the expected profit

Question

All information given  Not looking for max F(q) with random numbers that are not given in question  A store will order q gallons of a liquid product to meet demand during a partic  ular time period  This product can be dispensed to customers in any amount desired, so demand during the period is a continuous random variable X with cdf F(a)  There is a fixed cost co for ordering the product plus a cost of c1 per gallon purchased  The per gallon sale price of the product is d  Liquid left un  sold at the end of the time period has a salvage value of e per gallon  Finally, if demand exceeds q, there will be a shortage cost for loss of goodwill and future business  this cost is f per gallon of unfulfilled demand  How can we estimate q that maximizes the expected profit

SolutionInn · Accepted Answer

The Answer is in the image, click to view ...

Question: All information given. Not looking for max F(q) with random numbers that are not given in question. A store will order q gallons of a

Step by Step Solution

Students Have Also Explored These Related Mathematics Questions!