Assignment:
Question 1
In the news vendor problem, the expected profit _________ as the critical ratio ____________.
- increases, stays the same
- decreases, decreases
- None of the other options apply
- decreases, increases
- stays the same, increases
Question 2
Goop Inc. needs to order a raw material to make a special polymer. The demand for the polymer is forecasted to be Normally distributed with a mean of 250 gallons and a standard deviation of 80 gallons. Goop sells the polymer for $25 per gallon. Goop's purchases raw material for $10 per gallon and Goop must spend $5 per gallon to dispose of all unused raw material due to government regulations. (Assume one gallon of raw material yields one gallon of polymer with no extra cost.) If demand is more than Goop can make, then Goop sells only what they made and the rest of the demand is lost.
Suppose Goop purchases 150 gallons of raw material. What is the probability that they will run out of raw material?
A. < 5%
B. >= 5%, but < 15%
C. >= 15%, but < 35%
D. >= 35%, but < 65%
E. >= 65%, but < 85%
F. >= 85%, but < 95%
G. >= 95%
Question 3
Goop Inc. needs to order a raw material to make a special polymer. The demand for the polymer is forecasted to be Normally distributed with a mean of 250 gallons and a standard deviation of 80 gallons. Goop sells the polymer for $25 per gallon. Goop's purchases raw material for $10 per gallon and Goop must spend $5 per gallon to dispose of all unused raw material due to government regulations. (Assume one gallon of raw material yields one gallon of polymer with no extra cost.) If demand is more than Goop can make, then Goop sells only what they made and the rest of the demand is lost.
Suppose Goop wants to ensure that there is a 92% probability that they will be able to satisfy the customer's entire demand. How many gallons of the raw material should they purchase?
Less than 150
At least 150, but less than 200
At least 200, but less than 250
At least 250, but less than 300
At least 300, but less than 350
At least 350, but less than 400
At least 400, but less than 450
At least 450
Question 4
Goop Inc. needs to order a raw material to make a special polymer. The demand for the polymer is forecasted to be Normally distributed with a mean of 250 gallons and a standard deviation of 80 gallons. Goop sells the polymer for $25 per gallon. Goop's purchases raw material for $10 per gallon and Goop must spend $5 per gallon to dispose of all unused raw material due to government regulations. (Assume one gallon of raw material yields one gallon of polymer with no extra cost.) If demand is more than Goop can make, then Goop sells only what they made and the rest of the demand is lost.
Suppose Goop purchases 300 gallons of raw material. What are the expected sales (in gallons)?
Less than 140
At least 140, but less than 180
At least 180, but less than 220
At least 220, but less than 260
At least 260, but less than 300
At least 300, but less than 340
At least 340