Suppose that in problem 35, Rachel can spend $1,000 to buy a well-placed booth at the concert.
Question:
Suppose that in problem 35, Rachel can spend $1,000 to buy a well-placed booth at the concert. Doing so would raise the expected sales of T-shirts from 1,000 to 1,200 and lower the standard deviation of demand from 100 to 50.
a. Should she decide to pursue this option, how many T-shirts should Rachel make?
b. Should Rachel spend the money for the better placed booth?
DATA FROM PROBLEM 35:
Rachel is making T-shirts that she hopes to sell at the upcoming “War on War” concert. The T-shirts cost $6 each to produce, and she will price them at $20 each. She expects that she can donate any unsold T-shirts to a local charity for a tax write-off of $2 each. Based on her experience at past concerts, Rachel expects to sell 1,000 T-shirts, with a standard deviation of 100 T-shirts.
Step by Step Answer:
Managing Operations Across The Supply Chain
ISBN: 9781260547634
4th Edition
Authors: Morgan Swink, Steven Melnyk, Janet L. Hartley, M. Bixby Cooper