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Unformatted text preview: ARE 157 ANALYSIS FOR PRODUCTION MANAGEMENT Homework 3 _ du..L rA(M~ MCU;j 111 ~ l4. Clll Ss 1. (8) Janelle sells copies ofthe 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 ofher 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 ofeach day for recyclmg and bring in no revenue. Based on past sales experience, Janelle knows the probability of selling various quantities ofpapers is: # ofpapers P(d) P(D) 25 26 .10 27 .25 28 .20 29 .15 30 .15 31 .12 32 .03 33 or more a. Find P(D), the probability of"stocking ouf' (selling every copy in stock) for each level offorms 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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This note was uploaded on 10/06/2010 for the course ARE 51800 taught by Professor Whitney during the Spring '10 term at UC Davis.
 Spring '10
 WHITNEY

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