Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can I please get a clear picture for how the decision tree looks like and a difference between part a and b? I review old
Can I please get a clear picture for how the decision tree looks like and a difference between part a and b? I review old answers but they are pretty confusing or missing steps. Thanks
The national coffee store Farbucks needs to decide in August how many holiday-edition insulated coffee mugs to order. Because the mugs are date, those that are unsold by January 15 are considered a loss. These premium mugs sell for $23.95 and cost $6.75 each. Farbucks is uncertain of the demand. The believe that there is a 25% chance that they will sell 10,000 mugs, a 50% chance that they will sell 15,000 mugs, and a 25% chance that they will sell 20,000 mugs. a) Build a decision tree (using PrecisionTree or not) to determine if they should order 12,000,15,000 or 18,000 mugs. Be sure that your model does not allow Farbucks to sell more mugs that they ordered. (You can use If() command in Excel. If demand is les than the order quantity, the amount sold is the demand. Otherwise, the amount sold id the order quantity. ) b) Now, assume any unsold mugs are discounted and sold for $5. How does this affect the decision
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started