Question 4

Chapter 12: Dan’s Independent Book Store is trying to decide on how many copies of a book to purchase at the start of the upcoming selling season. The book retails at $30.00. The publisher sells the book to Dan at $20.00. Dan will dispose of all of the unsold copies of the book at 50% off the retail price, at the end of the season. Dan estimates that demand for this book during the season is Normal with a mean of 1200 and a standard deviation of 300.

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Suppose Dan wants to maximize his expected profits from the sale of this book. How many copies should he order from the publisher? Choose the closest answer.

a. | Less than 1000 |

b. | At least 1000 but less than 1100 |

c. | At least 1100 but less than 1200 |

d. | At least 1200 but less than 1300 |

e. | At least 1300 but less than 1400 |

f. | At least 1400 but less than 1500 |

g. | At least 1500 |

h. | Cannot say |

10 points

Question 5

Chapter 12: Dan’s Independent Book Store is trying to decide on how many copies of a book to purchase at the start of the upcoming selling season. The book retails at $30.00. The publisher sells the book to Dan at $20.00. Dan will dispose of all of the unsold copies of the book at 50% off the retail price, at the end of the season. Dan estimates that demand for this book during the season is Normal with a mean of 1200 and a standard deviation of 300.

Suppose Dan orders 1300 copies. What is Dan’s expected profit? Choose the closest answer.

a. | Less than 9500$ |

b. | At least 9500$ but less than 9750$ |

c. | At least 9750$ but less than 10000$ |

d. | At least 10000$ but less than 10250$ |

e. | At least 10250$ but less than 10500$ |

f. | At least 10500$ but less than 10750$ |

g. | At least 10750$ |

10 points

Question 6

Chapter 12: Suppose the news vendor model describes a firm’s operations decision. Is it possible to have positive expected lost sales and positive expected left over inventory? Choose the best answer.

a. | No – if there is left over inventory then there should not be lost sales. |

b. | No – if expected lost sales is positive, then expected left over inventory must be negative. |

c. | No – actual demand can differ from sales. |

d. | Yes – they are both expectations over numerous possible outcomes, among which there will be no outcome in which both are positive. |

e. | Yes – as long as the underage cost is greater than the overage cost. |

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