Question

Q.3. A grocery store with a bakery department is faced with the problems of how many cakes to buy in order to meet the days demand. The grocer prefers not to sell day old goods in competition with fresh products, leftover cakes are therefore, a complete loss. On the other hand, if a customer desires a cake and all of them have been sold, the disappointed customer will buy elsewhere and the sales will be lost. The grocer has, therefore collected information on the past sales or a selected 100 day period as shown in the table below. Sales per day No. of days Probability 25 10 0.10 26 30 0.30 27 50 0.50 28 10 0.10 Construct the payoff table and the opportunity loss table. What is the optimum number of cakes that should be bought each day ? Apply both EMV and EOL Criteria. Also find and interpret EVPI. A cake cost Rs. 0.80 and sells for Rs. 1.00.

Answer 1

Answer:

Step-by-step explanation:

Nₐ (a = 1,2,3,4) be all action of stocking cakes

Sₐ (a = 1,2,3,4) be nature of demand

Payoff = MP * cakes sold - MP * Cakes not sold

= (100- 80 ) * cakes sold - 80 * Cakes not sold

= 20 D    .if D>/ S

20D - 80 ( S-D)

= 100D - 80S , if D<S