ARE 157
ANALYSIS
FOR
PRODUCTION
MANAGEMENT
Homework 3
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1.
(8)
Janelle sells copies
of
the Daily Racing Form, a horseracing betting guide, at
Bay
Meadows 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 timedependent content, any Racing Forms that
are
not
sold
are
discarded at the end
of
each
day for recyclmg 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
ouf'
(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?
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 Spring '10
 WHITNEY
 Economics, labor force, Janelle, FEB MAR APR, Jan Feb Mar

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