Question
A coffee shop gets a daily allocation of 100 bagels. The bagels can be either sold individually at $1.00 each or can be used later
A coffee shop gets a daily allocation of 100 bagels. The bagels can be either sold individually at $1.00 each or can be used later in the day for sandwiches. Each bagel sold as a sandwich provides a revenue of $1.50 independent of the other ingredients. (a)Suppose that demand for bagel sandwiches is estimated to be Poisson with parameter 80. How many bagels would you reserve for sandwiches? (b)Compare the expected revenue of the solution of part (a) to the expected revenue of the heuristic that does not reserve capacity for sandwiches assuming that demand for individual bagels is Poisson with parameter 150? (c)Answer Part (a) if the demand for bagel sandwiches is normal with mean 100 and standard deviation 20.
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