Question
In: Statistics and Probability
Lemington’s is trying to determine how many Jean Hudson dresses to order for the spring season....
Lemington’s is trying to determine how many Jean Hudson dresses to order for the spring season. Demand for the dresses is assumed to follow a normal distribution with mean 400 and standard deviation 100. The contract between Jean Hudson and Lemington’s works as follows. At the beginning of the season, Lemington’s reserves x units of capacity. xxLemington’s must take delivery for at least 0.8xdresses and can, if desired, take delivery on up to xdresses. Each dress sells for $160 and Hudson charges $50 per dress. If Lemington’s does not take delivery on all x dresses, it owes Hudson a $5 penalty for each unit of reserved capacity that is unused. For example, if Lemington’s orders 450 dresses and demand is for 400 dresses, Lemington’s will receive 400 dresses and owe Jean 400($50)+50($5). How many units of capacity should Lemington’s reserve to maximize its expected profit? Using @RISK.
Solutions
orchestra answered 1 year agoRelated Solutions
Lemington’sis trying to determine how many Jean Hudson dresses to order for the spring season. Demand...
Lemington’sis trying to determine how many Jean Hudson dresses
to order for the spring season. Demand for the dresses is assumed
to follow a normal distribution with mean of 400 and standard
deviation of 100. The contract between Jean Hudson and Lemington’s
works as follows. At the beginning of the season, Lemington’s
reserves x units of capacity. Lemington’s must take delivery for at
least 0.8x dresses and can, if desired, take delivery on up to x
dresses. Each dress sells...
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