IE 221 OPERATIONS RESEARCH / PROBABILISTIC MODELS FINAL EXAM , FALL 1998 1 ... A bakery bakes its cookies every morning before opening. It costs the bakery $.15 to bake each cookie, and each cookie is sold for $.35. At the end of the day, leftover cookies may be sold to a thrift bakery for $.05 per cookie. The number of cookies sold each day is a random variable described by the following table: Demand (dozens) 20 30 40 50 60 Probability .3 .2 .2 .15 .15 (a) How many dozen cookies should be baked each morning? (b) If the daily demand in dozens of cookies is Normally distributed with μ=50 and σ=20, how many dozen cookies should be baked? 2 ... Given the following data: Fixed order cost Cost per item Sale price per item Annual holding cost Annual demand Lead time demand $100 $5 $8 40% of item cost5000 units N(μ=20,σ=30) (a) If the reorder point that minimizes expected cost is 80, what is the shortage cost assuming backlogging? (b) If the reorder point that minimizes expected cost is 80, what is the shortage cost assuming lost sales?
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