Henrique Correa's bakery prepares all its cakes between 4 A.M.and 6 A.M.so they will be fresh when customers arrive. Day-old cakes are virtually always sold, but at a 50% discount off the regular $ price. The cost of baking a cake is $, and demand is estimated to be normally distributed, with a mean of and a standard deviation of . What is the optimal stocking level? Refer to the standard normal tableLOADING... for z-values. The optimal stocking level for the bakery is nothing cakes (round your response to the nearest whole number).

Question

contestada

Respuesta :

andromache andromache · Answer 1 · 2020-09-24T03:42:20+02:00

Answer:

27

Explanation:

The computation of the optimal stocking level for the bakery is shown below:

Given that

Cost = c = $7

Selling price = p = $ 10

salvage value = s = $ 5

Mean = 25

Standard deviation = [tex]\sigma[/tex]= 8

Now based on the above information

underage cost = Cu = p-c = $10 - $7 = $3

And,

overage cost = Co = c-s = $7 - $5 = $2

So,

[tex]\frac{P\leq C_{u}}{(C_{u}+C_{o})}\\\\\frac{P\leq3}{(3+2)}[/tex]

= 0.6

Now use normsinv() function in excel

So,

The Z value for the probability 0.6 is 0.2533

Now finally

The optimal stocking level is

[tex]=\mu +z\sigma[/tex]

= 25 + 0.2533 × 8

= 27.02

= 27