are157-homework-3.1

are157-homework-3.1 - ARE 157 ANALYSIS FOR PRODUCTION...

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ARE 157 Winter 2010 M. Whitney ANALYSIS FOR PRODUCTION MANAGEMENT Homework 3--Due Monday, March 1st, in class 1. (8) Janelle sells copies of the Daily Racing Form, a horse-racing betting guide, at Golden Gate Fields racetrack. She purchases each copy at wholesale for $3.00, and sells it at retail for $5.00. The opportunity cost of her time is $.35 per sale, for the transactions she completes. Due to their time-dependent content, any Racing Forms that are not sold are discarded at the end of each day for recycling and bring in no revenue. Based on past sales experience, Janelle knows the probability of selling various quantities of papers is: # of papers P(d) P(D) 25 0 26 .10 27 .25 28 .20 29 .15 30 .15 31 .12 32 .03 33 or more 0 a.. Find P(D), the probability of “stocking out” (selling every copy in stock) for each level of forms ordered. b. What is the optimal probability of stocking out? How many forms should Janelle order each day? c. What is the average number of forms she sells per day? Also, what is the average number of forms she discards each day? 2. (12) Heavenly Scents produces gift packs containing an assortment of soaps and lotions. Demand for the firm’s output is highly seasonal, peaking in the period before Christmas. The firm’s
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This note was uploaded on 03/18/2010 for the course ARE 157 taught by Professor Whitney during the Winter '08 term at UC Davis.

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are157-homework-3.1 - ARE 157 ANALYSIS FOR PRODUCTION...

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