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    QM 2 Submission E13

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    john specter
    The document recommends that a newspaper vendor order 2 stacks of newspapers per day, for a total of 100 newspapers, given the demand distribution of 75-200 newspapers per day. An analysis of profits over the demand range showed that ordering 100 newspapers results in the highest expected profit of Rs. 94.84 with relatively low risk, as it has the lowest standard deviation and coefficient of variation compared to ordering 50, 150, or 200 newspapers. Therefore, ordering 100 newspapers daily is suggested to assure the vendor a high and certain profit.

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    QM 2 Submission E13

    Uploaded by

    john specter
    17 views1 page
    The document recommends that a newspaper vendor order 2 stacks of newspapers per day, for a total of 100 newspapers, given the demand distribution of 75-200 newspapers per day. An analysis of profits over the demand range showed that ordering 100 newspapers results in the highest expected profit of Rs. 94.84 with relatively low risk, as it has the lowest standard deviation and coefficient of variation compared to ordering 50, 150, or 200 newspapers. Therefore, ordering 100 newspapers daily is suggested to assure the vendor a high and certain profit.

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    The document recommends that a newspaper vendor order 2 stacks of newspapers per day, for a total of 100 newspapers, given the demand distribution of 75-200 newspapers per day. An analysis of profits over the demand range showed that ordering 100 newspapers results in the highest expected profit of Rs. 94.84 with relatively low risk, as it has the lowest standard deviation and coefficient of variation compared to ordering 50, 150, or 200 newspapers. Therefore, ordering 100 newspapers daily is suggested to assure the vendor a high and certain profit.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views1 page

    QM 2 Submission E13

    Uploaded by

    john specter
    The document recommends that a newspaper vendor order 2 stacks of newspapers per day, for a total of 100 newspapers, given the demand distribution of 75-200 newspapers per day. An analysis of profits over the demand range showed that ordering 100 newspapers results in the highest expected profit of Rs. 94.84 with relatively low risk, as it has the lowest standard deviation and coefficient of variation compared to ordering 50, 150, or 200 newspapers. Therefore, ordering 100 newspapers daily is suggested to assure the vendor a high and certain profit.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    QM-II

    Newspaper Vendor

    Section E Group 13

    Demand: 75-200 newspapers/day

    Cost: Rs. 1 / newspaper

    Selling Price: Rs.2 / newspaper

    Size of each stack: 50 newspapers

    How many stacks should the newspaper vendor order?

    Assuming the probability distribution is uniform between 75 and 200. We recommend the
    newspaper vendor buy 2 stacks of newspaper (i.e. a total of 100 newspapers) every day at the start.

    We created a profit matrix assuming demand has a uniform probability distribution in the range of
    75-200. The below graph represents the profit for each order quantity at various demand levels.

    Profits
    250

    200

    150

    100
    Profit

    50

    0
    100

    170
    75
    80
    85
    90
    95

    105
    110
    115
    120
    125
    130
    135
    140
    145
    150
    155
    160
    165

    175
    180
    185
    190
    195
    200
    -50

    -100
    Demand

    50 100 150 200

    Given a uniform distribution, we see that an order of 150 newspapers earns the highest expected
    profit followed by an order of 100. Although the variance of the profit is very large for an order of
    150 in comparison to an order of 100. Assuming that a newspaper vendor would be a risk-averse
    person, an order of 100 newspapers assures him a high as well as a certain profit of close to Rs.
    94.84.

    Order (newspapers) 50 100 150 200


    Expected Profit 50 94.84 104.76 75.00
    Standard Deviation 0 12.25 50.27 73.03
    Range Lower Limit 50 50 0 -50
    Range Upper Limit 50 100 150 200
    Range 0 50 150 250
    Coefficient of Variation 0% 13% 48% 97%

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