Propose an ordering policy, Operation Management

Bookstore buys a popular freshman physics book at $30 each and sells it to students at $50 each.  The same book is used for Fall and Winter terms.  The demand for books is distributed Normally with a mean of 150 and 200 for Fall and Winter terms, respectively.  The standard deviation of demand is 50, for Fall as well as Winter terms.  The demand for each term can be assumed to be independent.   
 
The publisher comes up with a new edition every year, making the old edition of the book worthless.  The Bookstore simply throws away any leftover books at the end of the academic year (Winter Term). You have been asked to help the Bookstore in its purchasing decision for Physics books.

(a)  Suppose the Bookstore used a newsvendor model to order books for each term.  How many books should they order for Fall term and for the Winter term?

(b)   Bill Nye, the new purchasing guy, at the Bookstore thinks one can just use the total demand for the year and make one purchasing decision for the whole year.  How much should he order using this reasoning?  Why this order quantity is different than the sum of order quantities computed separately for Fall and Winter in part (a)?
 
(c)  What would YOU recommend to the bookstore?  Propose an ordering policy (with numbers, if you can) and explain why this is a better alternative.  Is your policy the best one can do?  Why (not)?

Posted Date: 2/18/2013 4:55:37 AM | Location : United States







Related Discussions:- Propose an ordering policy, Assignment Help, Ask Question on Propose an ordering policy, Get Answer, Expert's Help, Propose an ordering policy Discussions

Write discussion on Propose an ordering policy
Your posts are moderated
Related Questions
Today, employers are using employees more and more in a matrixed environment. What does that mean? How can we contend with the various stressors in such an environment? How do we m

Definitions of Performance Measurement 1. The first step in a business measurement process is to define the content and objectives of the business - this will help reveal whet

Explain how the EOQ technique helps explain the following: All things being equal, the production inventory quantity will be larger than the economic order quantity.

Discuss customer service level for an inventory system within the context of quality management

How can situational approaches to leadership integrate goals to increase the effectiveness of your organization?

Charles Teplitz's firm wishes to use factor rating to help select and outsourcing provider of logistics services. A) with weights 1-5(5 highest) and ratings 1-100 (100 highest), us

Risk is often described as the event that "might" happen during the course of a project. Explain how risk has impacted a project that you have been associated with as a team member

Perform an analysis of the social / demographic, technological, economic, environmental / geographic, and political/legal / governmental segments to understand the general environm

1. Based on GM's current condition, do you think it is ethical to reduce the number of employees? Why or why not?

One of the package of features that make up a service are: Appearance Facilitating goods Packaging Cost Implied use