1.A newsvendor must determine on a daily basis how many newspapers to purchase in order to obtain the maximum profit. Each newspaper is sold for $12.00 and purchased at the local distributor for $5.00. If the newspaper demand exceeds the amount purchased, there is an opportunity cost to the newsvendor of $7.00 in profits not achieved, whereas if the demand is fewer than purchased, the news vendor may sell the remaining issues at 50% of its purchasing price. It has been observed that the demand may fluctuate between 1 and 16 newspapers on a daily basis. Analyze the case stated above according to the following criteria: 

a. Identify the decision variables, the output variables, and the factors that may be uncontrollable. 

b. Define the reward/cost function that defines this situation 

c. Build the two-way decision matrix 

d. Find the best alternative given the Maximum Expected Value 

e. Find the best alternative that minimizes the cost of opportunity 

f. Create a matrix table in Power Bi to visualize the possible decisions. 

2. A car dealer runs a business where she purchases cars to a bid price and sells to an asking price. She must decide how many cards to purchase at the beginning of the year to sell. She classifies the cars into three categories: Recent (less than one year of use), one-year-old (more than one year but less than 2), 2 years old, and 3 years old. The demand is uncertain and she has observed that in a year she may sell a minimum of 10 cars to a maximum of 100 cars. A car that is 3 years old but couldn’t be sold by the end of the year may be sold to a salvage value of $750 USD for spare parts. The following information is obtained from the business: Depreciation (annual) on cars 30% Overhead Costs Property taxes on the facility $ 2,750 Rent on the building $ 30,000 Salaries of cleaning & maintenance personnel $ 15,000 Salaries of sellers $ 20,000 Salaries of administrative staff $ 30,000 Supplies not directly associated with cars $ 5,000 Utilities for the car lot $ 7,500 Advertising $ 5,000 Insurance (liability, accidents, etc.) per year $ 7,500 P(D=6)= 0.25 P(D=8)= 0.5 P(D=10)= 0.25 

The distribution % represents how many cars of each type she plans to buy at the beginning of the year. Overhead costs are the following: Car model Distribution Bid-Ask Sales Commission Salvage value Recent 85% $ 15,000 $ 25,500 1% 0 1 year 10% $ 7,500 $ 12,750 1% 0 2 year 5% $ 3,000 $ 5,100 1% 0 3 year 0% $ 1,000 $ 1,700 1% $ 750.00 What is the best purchasing decision such that the EBITDA is maximized? Analyze the case stated above according to the following criteria: 

a. Identify the decision variables, the output variables, and the factors that may be uncontrollable. 

b. Define the reward/cost function that defines this situation 

c. Build the two-way decision matrix 

d. Find the best alternative given the Maximum Expected Value 

e. Find the best alternative that minimizes the cost of opportunity. 

f. Create a table in Power BI to visualize the possible decisions. 

3.- Suppose that a Pizza King and Noble Greek stop advertising but must determine the price they will charge for each pizza sold. Pizza King believes that Noble Greek’s price is a random variable D having the following mass function: If Pizza King Charges a price p1 and Noble Greek charges a price of p2, Pizza King will sell 100 + 25(p2-p1) pizzas. It costs Pizza King $4 to make a pizza. Pizza King is considering charging $5, $6, $7, $8, or $9 for a pizza. 

a. Use the Minimax with the cost of opportunity criterion to decide the appropriate price to be charged for a pizza. 

b. Use the Maximum expected reward criteria to decide the appropriate price to be charged. 

c. What price decision will provide Pizza King with the highest expected reward and at what volume according to the information at a and b? 

d. Build a report in Power BI to visualize the possible outcomes. 

Answer rating: 100% (QA)

1 a Choice factors The quantity of papers to buy consistently Yield factors Benefit Wild factors Paper interest opportunity cost and fluctuating interest somewhere in the range of 1 and 16 papers b Th... View the full answer