The Campus Bookstore Sells Highlighters That It Purchases by the Case

question 66

Essay

The campus bookstore sells highlighters that it purchases by the case. Cost per case, including shipping and handling, is $200. Revenue per case is $350. Any cases unsold will be discounted and sold at $175. The bookstore has estimated that demand will follow the pattern below
$$\begin{array} { | c | c | } \hline \text { Demand level } & \text { Probability } \\\hline 10 \text { cases } & 20 \% \\\hline 11 \text { cases } & 20 \% \\\hline 12 \text { cases } & 40 \% \\\hline 13 \text { cases } & 15 \% \\\hline 14 \text { cases } & 5 \% \\\hline\end{array}$$ a. Construct the bookstore's payoff table.
b. How many cases should the bookstore stock in order to maximize profit?
c. How would your answer differ if the clearance price were not $175 per case but $225 per case? (It is not necessary to re-solve the problem to answer this.)

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Definitions:

Assignment Problem

A type of optimization problem in which tasks or resources are allocated to agents or locations in the most efficient way.

Project Assignment

The allocation of resources, tasks, and responsibilities to team members or groups within the framework of a project to achieve specific objectives.

Workers

Individuals engaged in a particular job or sector of employment, contributing their skills and labor in exchange for compensation.

Work Order Progress

The tracking of the completion stages of a work order from initiation through to completion, enabling visibility into the status and progress of tasks or production.