Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the next day. Hint: since newsvendor, there is no minimum inventory level. Think profit maximizing quantity instead. What is the in-stock probability for specialty buns that would maximize profit? Assume that unsold items have no salvage value. EXHIBIT 2: JUNE 2012 SALES VOLUME FOR SPECIALTY BUNS FOR ABERDEEN STORE AND JORDAN MTR STORE** EXHIBIT 3: AVERAGE SELLING PRICE AND AVERAGE PRODUCT COST** : June Average Selling Price Average Out-of-Factory Cost 1 2 Specialty Buns HKD 7.80 HKD 3.12 3 4 ** Disguised data EXHIBIT 1: TIME FOR PLACING ORDERS AND DELIVERY TIME Category Order by Delivery Time Day of Week Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday 9:30 pm on first day Specialty Buns Sliced Loaf Bread First delivery on third day Aberdeen Store 966 1,047 927 952 1,033 1,315 1,219 1,232 1,399 1,216 1,216 1,388 1,230 1.250 1.145 1.213 1,034 1,083 1,222 1,118 1.292 1,128 1,044 1,007 901 1.107 1,140 1,231 1.272 1,052 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Jordan MTR Store 2,542 3,010 1,626 1,677 2,754 3.900 3.480 3,569 4.198 2.283 2.238 4,029 3,406 3,561 3,193 3,489 1,870 1.967 3,390 3,094 3.360 3,109 2.912 1.938 1.571 3,046 3,206 3,554 3,808 2.992 Specialty Cakes Large Cakes 4:00 pm on first day 9:30 pm on first day Second delivery on second day Third delivery on second day Source: Mui Chiu, district manager, Arome Bakery, interview by author, Hong Kong, 25 May 2012 Thursday Friday 30 Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the next day. Hint: since newsvendor, there is no minimum inventory level. Think profit maximizing quantity instead. What is the in-stock probability for specialty buns that would maximize profit? Assume that unsold items have no salvage value. EXHIBIT 2: JUNE 2012 SALES VOLUME FOR SPECIALTY BUNS FOR ABERDEEN STORE AND JORDAN MTR STORE** EXHIBIT 3: AVERAGE SELLING PRICE AND AVERAGE PRODUCT COST** : June Average Selling Price Average Out-of-Factory Cost 1 2 Specialty Buns HKD 7.80 HKD 3.12 3 4 ** Disguised data EXHIBIT 1: TIME FOR PLACING ORDERS AND DELIVERY TIME Category Order by Delivery Time Day of Week Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday 9:30 pm on first day Specialty Buns Sliced Loaf Bread First delivery on third day Aberdeen Store 966 1,047 927 952 1,033 1,315 1,219 1,232 1,399 1,216 1,216 1,388 1,230 1.250 1.145 1.213 1,034 1,083 1,222 1,118 1.292 1,128 1,044 1,007 901 1.107 1,140 1,231 1.272 1,052 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Jordan MTR Store 2,542 3,010 1,626 1,677 2,754 3.900 3.480 3,569 4.198 2.283 2.238 4,029 3,406 3,561 3,193 3,489 1,870 1.967 3,390 3,094 3.360 3,109 2.912 1.938 1.571 3,046 3,206 3,554 3,808 2.992 Specialty Cakes Large Cakes 4:00 pm on first day 9:30 pm on first day Second delivery on second day Third delivery on second day Source: Mui Chiu, district manager, Arome Bakery, interview by author, Hong Kong, 25 May 2012 Thursday Friday 30
