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A student group must order hot dogs for a concession stand at a sporting event. In the past, demand has been 7, 8, 9, or 10 dozen hot dogs for the event, depending on attendance and the weather. They need to order the hot dogs and buns the week before the event and will not be able to return any unused inventory. They purchase the hot dogs and buns for $2 per dozen and sell them for $6 per dozen. Fill in the following table to show the net profit (profit minus cost) for each of the possible order and demand levels: 7, 8, 9, or 10 dozen.
Demand Demand Demand Demand7 Dozen 8 Dozen 9 Dozen 10 Dozenorder 7 dozenorder 8 dozenorder 9 dozenorder 10 dozen
Find what size order a pessimistic decision maker would place.
Find what size order an optimistic decision maker would place.
What size order would you place if you knew from past experience that each demand level is equally likely?
Determine the following:- The amount of funds released by the lockbox arrangement, The annual (pretax) earnings on the released funds
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