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2. The management of the warehouse store has decided to offer a robotic turkey toy in the weeks before Thanksgiving, hoping that people who
2. The management of the warehouse store has decided to offer a robotic turkey toy in the weeks before Thanksgiving, hoping that people who are hosting Thanksgiving dinner at their home will buy one to entertain their children and guests. (Turkeys don't fly, so the robot isn't a flying drone.) The company plans to sell the toy turkeys primarily in bricks-and-mortar stores. Any leftover toy turkeys will be given to employees for free on the day before Thanksgiving. Each store manager will have one opportunity to order the toy turkeys. Each toy turkey costs $35 and will be sold for $50. The manager at the Richmond store (north of Berkeley) has an MBA and only knows about Normal distributions. She decides to use a Normal distribution with a mean of 200 and a standard deviation of 50. The manager at the San Leandro store (south of Berkeley) knows very little about statistics and can only provide a rough statistical distribution. He thinks there is a 20% chance of selling 100, a 30% chance of selling 150, a 35% chance of selling 200 and a 15% chance of selling 250. How much should each manager order? (To solve the problem for the San Leandro store, you should use the fact that when you are facing a newsvendor problem and there is a discrete demand distribution, you should choose the smallest demand outcome in the stated distribution that is greater than or equal to the optimal fractile.) What advice would you give your friend who is really interested in buying a toy turkey?
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