Question: NOTE ONLY SOLVE THE PART WHICH IS BOLD AND UNDERLINE EVRYTHING IS SOLVED ALSO THIS IS ONE WHOLE QUESTION NOTHING MORE LEFT AND NOTHING MISSING
NOTE ONLY SOLVE THE PART WHICH IS BOLD AND UNDERLINE EVRYTHING IS SOLVED
ALSO THIS IS ONE WHOLE QUESTION NOTHING MORE LEFT AND NOTHING MISSING
PLEASE ITS LAST DATE HELP ME WITH THE LAST UNDERLINE PART TO SOLVE
TUTOR YOU HAVE TO ONLY SOLVE question IN PART C FROM question B to G
rest evrthing is sloved and written in the question
PART A
Humber Bakery needs to decide how many units of its new Rexdough (nicknamedRex) bread to bake at the beginning of each day. Because the bakery prides itself as the maker of the freshest premium bread in town, units that are unsold by the end of the day are discarded and considered loss. Each Rexdough bread costs$1.56to produce and sells for$4.33. Humber's objective is to maximize daily gross profit. The bakery's daily production system is set up as follows:
production System
Light Production (23,000 loaves)
Moderate Production (32,000 loaves)
Heavy Production (46,000 loaves)
Humber Bakery is uncertain about the demand forRexbut believes that one of the following states of nature (outcomes) will occur:
States of Nature
Low Demand (20,000 loaves)
Medium Demand (30,000 loaves)
High Demand (40,000 loaves)
Note: The bakery cannot sell more than it produces. For example, if production level is moderate (30,000) and demand is low (20,000), the bakery will sell only 20,000 units but will incur the costs of producing 30,000 units. The corresponding gross profit will be $4.33(20,000) - $1.56(30,000) = $39,800.
1 payoff table
Low Demand Medium Demand High Demand
Light
Production 50720 63710 63710
Moderate
Production 39800 83100 83100
Heavy
Production 14840 58140 101440
2After some deliberations, the bakery's manager arrived at the following probabilities of the states of nature (outcomes):
Probabilities for States of Nature
P(Low Demand)= 0.7
P(Medium Demand)= 0.2
P(High Demand)= 0.1
a.EMV = 54617
b.OPTIMAL DECISION IS LIGHT PRODUCTION
.
PART B
If Humber chooses the heavy production plan, they will make a price reduction offer to Bramptinos (a large supermarket chain) on the condition that Bramptinos purchases all units produced under the heavy plan.
There is a 39% chance that Bramptinos will accept this offer. If Bramptinos accepts, Humber is guaranteed to sell all the 46,000 units it produces under the heavy production plan at $3.68 each. Although Humber will sellRexfor $0.65 less at this price, Humber values the guarantee and sees the relationship as an opportunity for expansion in the long run. If Bramptinos declines the offer, the loaves will still sell based on current demand conditions (low, medium, or high).
below decision tree below that best describes the updated decision problem.
heavy production plan would humber adopt
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