In some small markets, Bob's Big Boy sells fried chicken in the evenings in small towns where there is not many options for residents to buy their excellent product.  Since fried chicken is not their main market, they must decide each day how much chicken they will sell that day. According to their menu, they sell fried chicken from 4:30 pm through 8:00 pm. To keep it simple, Bob's Big Boy sells an order of chicken for $5.00.    Each order of chicken costs them $4.00 to buy, cook, and package.  Since the chicken isn't able to be kept the next day, it is simply given to employees. Based on past history, Bob's Big Boy estimates that they can sell 400 orders of chickens in an average day with a standard deviation of 200 orders.  

POST: Based on the types of calculations in the "Newsboy Problem"

1. How many orders of chicken should Bob's Big Boy prepare each day to maximize profit?
2. After taking this class, the manager of Bob's Big Boy considers the concept of salvage value and posts a sign on the take-out at 8:00 PM noting you can get an order of Chicken for $2.50 until they run out. Does that change the number of orders of chicken that Bob's Big Boy should prepare?
3. Calculate the expected profit of each scenario in a and b- and recommend a course of action.

Answer rating: 100% (QA)

Lets break down the problem and address each part Part A Without Salvage Value Given Information Selling price per order 500 Cost per order 400 Estima... View the full answer