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sdas [7]
3 years ago
15

Burger Prince buys top-grade ground beef for $1.00 per pound. A large sign over the entrance guarantees that the meat is fresh d

aily. Any leftover meat is sold to the local high school cafeteria for 80 cents per pound. Four hamburgers can be prepared from each pound of meat. Burgers sell for 60 cents each. Labor, overhead, meat, buns, and condiments cost 50 cents per burger. Demand is normally distributed with a mean of 301 pounds per day and a standard deviation of 37 pounds per day. What daily order quantity is optimal? (Hint: Shortage cost must be in dollars per pound.)
Business
1 answer:
Gnoma [55]3 years ago
7 0

Answer:

The optimal order quantity is 316 pounds

Explanation:

In order to calculate What daily order quantity is optimal, we have to calculate first The cost of underestimating the demand Cu and cost of overestimating demand Co

Cu = ($0.60 - $0.50)*4 = $0.40

Co = $1 - $0.80 = $0.20

Next we have to calculate the Service Level = Cu / (Cu + Co)

= 0.40 / (0.40 + 0.20)

= 0.40/0.60

= 0.6667

So, Z Value at above service level = 0.430727

Therefore, in order to calculate the Optimal Order quantity, we would have to use the following formula

Optimal Order quantity= Mean + Z Value × Std Deviation

= 301 + 37 * 0.430727

= 301 + 15.36899

= 316 pounds

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The Company estimates that 5,000 units will be sold with a 10 percent plus-or-minus range. So, let calculate the worst case for the sale of units, in this case being 90% of the 5,000 unit estimate. Calculate 90% of 5,000, and this gives us 4,500 units as the worst case scenario.

To calculate the the worst case scenario for price, lets use the $3.00 per unit estimated by the Company, and apply the same concept, however, taking into account that sales price has a 5 percent plus-or minus range. So we caclulate %95 of $3.00, and this gives us $2.85 as our worst case scenario for price.

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4 years ago
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4 0
3 years ago
It is important for a government to have a currency that is easily exchanged in world markets because it:
givi [52]

A country's currency should be easily exchangeable because d. lets you buy and sell goods and services anywhere in the world.

<h3>Importance of international trade </h3>
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Those goods and services need to be able to be purchased regardless of the country one is in. This is why currency needs to be easily exchangeable so as to facilitate this trade.

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