Question: Using data in Exhibits 1,2, & 3 Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the

Using data in Exhibits 1,2, & 3 Solve as a newsvendor

Using data in Exhibits 1,2, & 3 Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the next day. Hint: since newsvendor, there is no minimum inventory level. Determine profit maximizing quantity instead. What is the in-stock probability for specialty buns that would maximize profit? Assume that unsold items have no salvage value. Consider daily demand at the Aberdeen and Jordan stores. For which stores, if any, should "weekday" and "weekend" order quantities be different? 1 3 2010 4 7 o 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. What is the expected weekly profit at each store? EXHIBIT 2: JUNE 2012 SALES VOLUME FOR SPECIALTY BUNS FOR ABERDEEN STORE AND JORDAN MTR STORE** EXHIBIT 1: TIME FOR PLACING ORDERS AND DELIVERY TIME Day of Week Junc Aberdeen Store Jordan MTR Store Thursday 2.542 Friday 2 1.047 Category Order by Delivery Time Saturday 927 1.626 Sunday 952 1.677 Monday 5 1,033 Specialty Buns 2.754 9:30 pm on first day Tuesday 1.315 First delivery on third day 3.900 Sliced Loaf Bread Wednesday 1,219 3.480 Thursalny 1.232 3.560 Fricky 1.399 4.198 Specialty Cakes 4:00 pm on first day Second delivery on second day Saturday 10 1.216 2.28 1,216 Large Cakes 9:30 pm on first day Sunday Third delivery on second day 2.238 Monday 12 1.388 4,029 Tuesday 1,230 3,40% Source: Mui Chiu, district manager, Arome Bakery, interview by author, Hong Kong, 25 May 2012. Wednesday 3.561 Thursday IS 1,145 3,193 Fricky 16 1,213 3.489 Saturday 12 1,034 1.870 Sunday 1,083 1.967 Monkey 19 1.222 Tuesday 20 1,118 Wednesday 21 1.292 Thursday 22 1.12 3.109 Frily 23 23 1,044 2012 Saturday 1,007 1.938 Sunday 1,571 Monday 1.107 3,046 Tuesday 1.1-10 3.206 1.231 3.554 Thursday 1.272 3,809 Friday 1,052 2.992 14 3,094 901 25 26 Wednesday 29 30 EXHIBIT 3: AVERAGE SELLING PRICE AND AVERAGE PRODUCT COST** Average Selling Price Average Out-of-Factory Cost - Specialty Buns HKD 7.80 HKD 3.12 Disguised data Using data in Exhibits 1,2, & 3 Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the next day. Hint: since newsvendor, there is no minimum inventory level. Determine profit maximizing quantity instead. What is the in-stock probability for specialty buns that would maximize profit? Assume that unsold items have no salvage value. Consider daily demand at the Aberdeen and Jordan stores. For which stores, if any, should "weekday" and "weekend" order quantities be different? 1 3 2010 4 7 o 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. What is the expected weekly profit at each store? EXHIBIT 2: JUNE 2012 SALES VOLUME FOR SPECIALTY BUNS FOR ABERDEEN STORE AND JORDAN MTR STORE** EXHIBIT 1: TIME FOR PLACING ORDERS AND DELIVERY TIME Day of Week Junc Aberdeen Store Jordan MTR Store Thursday 2.542 Friday 2 1.047 Category Order by Delivery Time Saturday 927 1.626 Sunday 952 1.677 Monday 5 1,033 Specialty Buns 2.754 9:30 pm on first day Tuesday 1.315 First delivery on third day 3.900 Sliced Loaf Bread Wednesday 1,219 3.480 Thursalny 1.232 3.560 Fricky 1.399 4.198 Specialty Cakes 4:00 pm on first day Second delivery on second day Saturday 10 1.216 2.28 1,216 Large Cakes 9:30 pm on first day Sunday Third delivery on second day 2.238 Monday 12 1.388 4,029 Tuesday 1,230 3,40% Source: Mui Chiu, district manager, Arome Bakery, interview by author, Hong Kong, 25 May 2012. Wednesday 3.561 Thursday IS 1,145 3,193 Fricky 16 1,213 3.489 Saturday 12 1,034 1.870 Sunday 1,083 1.967 Monkey 19 1.222 Tuesday 20 1,118 Wednesday 21 1.292 Thursday 22 1.12 3.109 Frily 23 23 1,044 2012 Saturday 1,007 1.938 Sunday 1,571 Monday 1.107 3,046 Tuesday 1.1-10 3.206 1.231 3.554 Thursday 1.272 3,809 Friday 1,052 2.992 14 3,094 901 25 26 Wednesday 29 30 EXHIBIT 3: AVERAGE SELLING PRICE AND AVERAGE PRODUCT COST** Average Selling Price Average Out-of-Factory Cost - Specialty Buns HKD 7.80 HKD 3.12 Disguised data

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