Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Q 1 2 . 9 ( CPG Bagels ) CPG Bagels starts the day with a large production run of bagels. Through - out the
Q CPG Bagels CPG Bagels starts the day with a large production run of bagels. Through
out the morning, additional bagels are produced as needed. The last bake is completed at
PM and the store closes at PM It costs approximately $ in materials and labor to
make a bagel. The price of a fresh bagel is $ Bagels not sold by the end of the day
are sold the next day as day old bagels in bags of six, for $ a bag. About twothirds
of the dayold bagels are sold; the remainder are just thrown away. There are many bagel
flavors, but for simplicity, concentrate just on the plain bagels. The store manager predicts
that demand for plain bagels from PM until closing is normally distributed with mean of
and standard deviation of
a How many bagels should the store have at PM to maximize the stores expected profit
from sales between PM until closing Hint: Assume dayold bagels are sold for
$ $ each; ie dont worry about the fact that dayold bagels are sold in
bags of six.
b Suppose that the store manager is concerned that stockouts might cause a loss of future
business. To explore this idea, the store manager feels that it is appropriate to assign
a stockout cost of $ per bagel that is demanded but not filled. Customers frequently
purchase more than one bagel at a time. This cost is per bagel demanded that is not
satisfied rather than per customer that does not receive a complete order. Given the
additional stockout cost, how many bagels should the store have at PM to maximize
the stores expected profit?
c Suppose the store manager has bagels at PM How many bagels should the store
manager expect to have at the end of the day?
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