Maple Video Inc, a small video store in Vancouver, faces a daily challenge as it endeavors to meet the demands

for the popular DVD$,$ "Shrek," with its limited inventory of nine copies. A consistent influx of $15$ customers per day

specifically requests this movie. The critical aspect of this scenario lies in the potential consequences of unmet demand.

If the sought$-$after DVD is not readily available on the store's shelves, customers opt to abandon their search and promptly

head to a competing store. This not only results in a loss of immediate revenue but also poses a threat to the store's

customer loyalty as clients seek alternatives that can fulfill their needs promptly. The customer arrivals are evenly

distributed over a $24-$hour period. In addition to this demand dynamics, the average rental duration of $36$ hours adds

complexity to the store's operational considerations. Considering the case presented above:

A$)$ What is the likelihood that a customer going to the video store will find the movie available? $(2\mathrm{.}5$ Points$)$

B$)$ Assume each rental is $$5.$ How much revenue does the store make per day from the movie? $(2\mathrm{.}5$ Points$)$

C$)$ Assume each child that is not able to obtain the movie will receive a $$1$ bill. How much money would the store

have to give out to children requesting Shrek every day? $(2\mathrm{.}5$ Points$)$

D$)$ Assume the demand for the movie will stay the same for another six months. What would be the payback time

$($not considering interest rates$)$ for purchasing an additional copy of the movie at $$50?$ Consider the extra

revenues related to question B and the potential cost savings $($question C$).(2\mathrm{.}5$ Points$)$

E$)$ What strategy would you recommend for Maple Video Inc. to mitigate lost sales and customer loyalty issues

while maximizing its revenue? Calculations are strongly recommended to justify your strategy. $(3$ Points$)$

Production Systems Management I $($MANU$/$F $270)$

Thursday March $14,2024$

Case $7$: Maple Video Inc

Team Members: $..............................................................$