HomeworkLib
Question

8. Consider a newsvendor environment where demand is expected to be uniformly distributed between 1000 and...

8. Consider a newsvendor environment where demand is expected to be uniformly distributed between 1000 and 4000 units. The variable production cost is $20 per unit and the sales price is $50 per unit. In addition, the producer must pay $5 to discard any unsold units. How many units should be produced? SHOW WORK

a. 3000

b. 2636

c. 2500

d. 3182

e. 3308

business   Operations-Management   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Underage cost, Cu = Sales price - Variable production cost = 50 - 20 = $ 30

Overage cost, Co = Variable production cost + Cost to discard unsold units = 20 + 5 = $ 25

Optimal service level, s = Cu/(Cu+Co) = 30/(30+25) = 0.5455

Number of units to be produced = a + s*(b-a) = 1000 + 0.5455*(4000-1000) = 2636

ANSWER: b. 2636

0 0
Add a comment
Know the answer?
Add Answer to:
8. Consider a newsvendor environment where demand is expected to be uniformly distributed between 1000 and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Consider a market where supply and demand are given by Qx= -16Px and price floor of $40, and agrees to purchase and dis...

    Consider a market where supply and demand are given by Qx= -16Px and price floor of $40, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $40 per unit. Qxa 92 - 2PX. Suppose the government imposes a a. Determine the cost to the government of buying firms' unsold units. b. Compute the lost social welfare (deadweight loss) that stems from the $40 price floor Consider a market where supply...

  • CONSIDER A MARKET WHERE SUPPLY AND DEMAND ARE GIVEN BY Qxs=-10+Px AND Qxd=56-2Px. SUPPOSE THE GOVERNMET...

    CONSIDER A MARKET WHERE SUPPLY AND DEMAND ARE GIVEN BY Qxs=-10+Px AND Qxd=56-2Px. SUPPOSE THE GOVERNMET IMPOSES A PRICE FLOOR OF $25, AND AGREES TO PURCHASE AND DISCARD ANY AND ALL UNITS CONSUMERS DO NOT BUY AT THE FLOOR PRICE OF $25 PER UNIT Determine the cost to the government of buying firms unsold units

  • Consider a market where supply and demand are given by QXS = -10 + PX and...

    Consider a market where supply and demand are given by QXS = -10 + PX and QXd = 56 - 2PX. Suppose the government imposes a price floor of $25, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $25 per unit. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Determine the cost to the government of buying firms’ unsold units. b. Compute the lost...

  • Consider a market where supply and demand are given by QXS = -12 + PX and...

    Consider a market where supply and demand are given by QXS = -12 + PX and QXd = 93 - 2PX. Suppose the government imposes a price floor of $44, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $44 per unit. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Determine the cost to the government of buying firms’ unsold units. $ 1188 b. Compute...

  • Let X be uniformly distributed in the unit interval [0,2]. Consider the random variable Y=g(x), where...

    Let X be uniformly distributed in the unit interval [0,2]. Consider the random variable Y=g(x), where g(x)=2, if x ≤ 1/4 and g(x) = 3, if X > 1/4. a.) find the expected value of Y (by first deriving its PDF)

  • 1. For the Red Tomato Garden Tools example, consider the following situation: The company has a S...

    1. For the Red Tomato Garden Tools example, consider the following situation: The company has a Six month aggregate production planning procedure in place. The following factors are considered for planning. The planners use a 160 hour-month for planning purposes. The average labor wage is assumed to be $18.00 per hour. Overtime wage rate is 2.0 times that of regular wage. Federal regulations stipulate that overtime for a worker cannot be more than 15 hours a month. The demand is...

  • Demand Management-situation assessment Consider the following information. You have a MTS product that has sales of...

    Demand Management-situation assessment Consider the following information. You have a MTS product that has sales of about 1000 units per month. You manufacture this product in 500 unit batches (so, roughly, a 500 unit batch every other week). There is no significant seasonality and the current standard deviation is 30 units per month. Customer orders: The average order size is 15 units; the largest, single order within any month is usually no more than 30. Orders are received daily and...

  • Consider a market in which consumer type x is uniformly distributed on the unit interval. Consumers...

    Consider a market in which consumer type x is uniformly distributed on the unit interval. Consumers demand 0 or 1 unit (they buy at most one unit overall in the market). Firm A is located at 0 and firm B at 1. Firms incur constant marginal costs of production c = 1/2. There is mass 1 of consumers. A consumer located at x ∈ [0;1] obtains utility ux = r−x−pA if she buys from firm A; ux = r−(1−x)−pB if...

  • Question 1 CrystalClear supplies 75-centiliter glass bottles to beverage manufacturers all around Europe. The company’s best...

    Question 1 CrystalClear supplies 75-centiliter glass bottles to beverage manufacturers all around Europe. The company’s best selling products are wine bottles and champagne bottles. Wine bottles are sold at a price of 3euro/unit, and champagne bottles are sold at 3.5 euro/unit. These two products can be manufactured in three different production lines: PL1, PL2 and PL3. These production lines present a different variable cost per unit per product (see Table 1). They also have a limited capacity of 1000 bottles...

  • Consider a market for electricity with aggregate inverse demand curve: p = 10 where p is...

    Consider a market for electricity with aggregate inverse demand curve: p = 10 where p is the price of electricity in dollars per unit. The market demand curve is thus horizontal at a price of 10 Let e denote consumption of electricity. A single firm has variable production costs of: c(e) = 2 Fixed costs are zero. Assume that each unit of production generates a units of damages de): d(e) = ae Assume that a = 2 (1) Assume there's...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT