Answer Quest #2 Please and Thank you.

1. A local grocery store buys USDA A+ grade pork at the wholesale price of $4 per pound and sells at the retail price of $7 per pound. The grocery store orders once per week. There is no chance to reorder during the week. The meat is good to be sold for one week. Unsold meat have to be dumped (Throw away to regular trash bin is not acceptable, it is hazardous material) at the cost of $0.5 per pound. The weekly demand is uncertain and has a discrete distribution: Demand Probability 300 0.25 400 0.25 500 0.25 600 0.25 How many pounds of meat should be order per week? What is the expected weekly profit? 2. Continue with the above question. A local butcher makes the following proposal to the grocery store: at the end of each week, the butcher can use the unsold meat, if any, to make salami. All salami can be sold at $3.5 per pound in the grocery store. He asks for a fixed fee of $200 for producing salami each time, no matter the quantity of meat processed. Should the grocery store accept his proposal? (Hint: you cannot repair the previous solution. You need to re-calculate Co, Cu, new ordering quantity and the new expected profit to see whether the grocery store can justify the additional cost.)