Question: Sarah Cheng would like to develop a more systematic approach for determining order quantities. Show all work to teach Sarah how to make these calculations

  1. Sarah Cheng would like to develop a more systematic approach for determining order quantities. Show all work to teach Sarah how to make these calculations for other products and stores.
    1. What is the in-stock probability for specialty buns that would maximize profit? Assume that unsold items have no salvage value. [2 points]
    2. Consider daily demand at the Aberdeen and Jordan stores. For which stores, if any, should weekday and weekend order quantities be different?
    3. Calculate the appropriate order quantities for the Aberdeen and Jordan stores. Note you will calculate between 2 and 4 quantities based on your answer above.
    4. What is the expected weekly profit at each store?
  2. Should the order quantity decisions be made at the corporate level or the store level? What are the advantages of each approach?
Average Daily Demand (all data) 1,146 2,959
Std. Dev. 130 739
Average Daily Demand (weehdays only) 3,345
Std. Dev. 403
Average Daily Demand (weekend days only) 1,896
Std. Dev. 250

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