Question: Please do a model in Excel and show how you got the figures for the answers A drugstore has been in the habit of ordering

Please do a model in Excel and show how you got the figures for the answers

Please do a model in Excel and show how you got

A drugstore has been in the habit of ordering just one case of hand sanitizer at a time. Each case contains 24 bottles, and each bottle contains 500mL of hand sanitizer. However, recently demand has been very strong, and they are thinking of placing larger orders, which would lower the cost per case, and hence lower the cost per bottle. If they order one case, the cost would be $14.50 per bottle; 2 cases would cost $13.75 per bottle, 3 cases would cost $12.50 per bottle. and 4 cases or more would cost $11.75 per bottle. The retail selling price will be $18.75 per bottle, however any bottles left unsold within a month of the best-before date will be sold off for $6.50 per bottle. The owner believes that at the regular price the possible demands are 1,2,3,4,5,6,7, or 8 dozens of bottles, with probabilities 0.05,0.10,0.15,0.20,0.20,0.15,0.1, and 0.05 respectively. The drugstore must place its entire order now. Assume that they will suffer no loss of goodwill if they happen to be out of stock. (a) Make and solve a model in Excel to provide a recommendation to the store based on maximizing the expected profit. (b) Determine the expected value of perfect information. (c) Suppose that the $6.50 to be received for each leftover bottle is negotiable within the range $4 to $10. Over what range for this value would the recommended order quantity found in part (a) be valid? (i) This can be found by manually varying the number in whatever cell was used for the salvage value in part (a)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!