157hmk03_w11rw09

157hmk03_w11rw09 - ARE 157 ANALYSIS FOR PRODUCTION...

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ARE 157 Winter 2011 M.Whitney ANALYSIS FOR PRODUCTION MANAGEMENT Homework 3--Due Wednesay., March.2nd, in class (10) 1. Shelly sells Valentine bouquets by the roadside on Valentine = s Day. Each bouquet sells for \$16.50. The flowers she uses for each bouquet cost \$9 wholesale, while the plastic heart, ribbon and tissue paper she uses for each bouquet costs \$1.50. If any bouquets don = t sell, she discards the flowers (but doesn = t need to use or discard the ribbon/tissue). wrap the bouquets or ring them up if they are donated. Based on past sales experience, Shelly knows the probability of selling various quantities of papers is: # of bouquets P(d) P(D) 26 0 27 .10 28 .10 29 .20 30 .25 31 .15 32 .10 33 .06 34 .04 35 or more 0 a.. Find P(D), the probability of A stocking out @ (selling every bouquet in stock) for each level of bouquets stocked. b. What is the optimal probability of stocking out? How many bouquets should Shelly prepare for Valentine = s Day? c. About how many bouquets does she expect to sell on an A average @ Valentine = s day (keeping in mind that sometimes she runs out)?. How many does she expect to discard an average V-day? What is her total profit on an average V-day? (10)2.

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157hmk03_w11rw09 - ARE 157 ANALYSIS FOR PRODUCTION...

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