Question
Potter James is the owner of Potter Patisserie, a pastry shop located just off the historic town square. Business has not been good lately as
Potter James is the owner of Potter Patisserie, a pastry shop located just off the historic town square.
Business has not been good lately as would-be customers frequently leave the store disgruntled when
their preferred pastries are not in stock. At the same time, costs have soared as Potter has had to
dispose of left-over pastries. Potter remembered that you are logistics whiz and decides to ask you for
your help. Potter buys kouign-amanns for $2.25 a piece and resells them for $4.20. Potter likes to sell
fresh pastries, so he throws away any leftovers at the end of the day.
1. Looking at Potters sales records from the last month, you estimate that average daily demand is
62 kouign-amanns with a standard deviation of 14 kouign-amanns.
a. Using excel, please create a column of expected demand and the probabilities of
realizing those demands.
b. Provide a scatter plot with expected demand as the x-axis and probabilities of realizing
those demands on the y-axis.
c. Assume that Potter decides to order 62 kouign-amanns.
i. Estimate the sales for each demand realization
ii. Calculate costs for ordering 62 kouign-amanns
iii. What is the expected profit for each demand realization? What is the total of
those profits?
d. Using solver, find the optimal order quantity of kouign-amanns Potter should order.
What is the total profit?
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