Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A hardware store must decide how many snow shovels to order for the coming snow season. Perform a sensitivity analysis and find the optimal order

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed
A hardware store must decide how many snow shovels to order for the coming snow season. Perform a sensitivity analysis and find the optimal order quantity and optimal expected profit for probabilities of a harsh winter ranging from 0.2 to 0.8 in increments of 0.2. Plot optimal expected profit as a function of the probability of a harsh winter. Click here to view the details of the scenario, Click here to view the decision tree.Details of the scenario Each shovel costs $13.00 and is sold for $25.95. No inventory is mrried from one snow season to the next Shovels unsold after February are sold at a discount price or $10.00. Past data indicate that sales are highly dependent on the severity of the winter season. Past seasons have been classied as mild or harsh, and the following distribution of regular price demand has been tabulated: Mild Winter Harsh \"Enter '3. No. of Shovels Probability No. of Shovels Probability 250 0.4 1.500 0.1 300 0.4 2.500 0.2 350 0.2 3.000 0.? Shovels must be ordered from the manufacturer in lots of 200; thus. possible order sizes are 200. 400. 1.400. 1,600. 2.400. 2,600. and 3.000 units. Decision tree The decision tree starts With a decision node With seven branches. one 10f each order size. Each branch has the form shown. Demand 250 0.4 For P(harsh) =0.2, the optimal order size is units for an expected profit of $ (Round to the nearest whole number as nee For P(harsh) = 0.4, the optimal order size is an expected profit of $ (Round to the nearest whole number as nee 2 400 For P(harsh) =0.6, the optimal order size is 200 in expected profit of $ (Round to the nearest whole number as nee 400 For P(harsh) =0.8, the optimal order size is an expected profit of $ (Round to the nearest whole number as nee 2.600 Choose the correct graph below. 3,000 O A. OC. Profit 1.600 A Profit 30,000 30.000- 1.400

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

General Aviation Marketing And Management

Authors: Alexander T. Wells, Bruce D. Chadbourne

2nd Edition

1575241927, 978-1575241920

More Books

Students also viewed these General Management questions

Question

How do cultures and social communities shape communication?

Answered: 1 week ago