How many cases of bread to stock each week to meet demand

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Reference no: EM131367010

Katy Bread, Victoria packs 12 loaves of bread in each case. Katy Bread must decide how many cases of Bread to stock each week to meet demand. The probability distribution of demand during a week is shown as follows.

Demand (Cases) Probability

15 .2

16 .25

17 .4

18 .15

Each case cost $10 and sells for $12. Unsold cases are sold to a local grocers for $2 per case. If there is a shortage, the company considers the cost of customer ill-will and lost profit to be $4 per case. The grocer must decide how many cases of Juice to order each week.

a) Construct the payoff table for this decision situation for Katy Bread

b) Find the best decision according to EMV criteria for Katy Bread

c) Find and interpret EVPI for Katy Bread.

Reference no: EM131367010

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How many cases of bread to stock each week to meet demand : Katy Bread, Victoria packs 12 loaves of bread in each case. Katy Bread must decide how many cases of Bread to stock each week to meet demand. Each case cost $10 and sells for $12. Unsold cases are sold to a local grocers for $2 per case. If there is ..

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