Problem:
All Boots is a retailer of Boots and purchases a kind of waterproof hunting boots at $40 each from its Asian supplier. Due to competition, all boots knows that it cannot sell these boots for more than $54. In addition, All boots anticipates excess inventory will need to be sold off demand the distribution as follows:
Please list all necessary steps
|
D
|
Pr(D)
|
F(D)
|
|
200
|
.10
|
.10
|
|
400
|
.20
|
.30
|
|
600
|
.25
|
.55
|
|
800
|
.20
|
.75
|
|
1000
|
.18
|
.93
|
|
1200
|
.07
|
1.00
|
Required:
Question 1) How many boots should all boots buy from its Asian supplier to maximize its expected profit?
Question 2) Given the order quantity in part a) on average, how many boots will all Boots have to discount at the end of the season? And on average, how many customers will All Boots expect to turn away because of stocking out?
Question 3) Given the order quantity a) what are all Boots' expected mismatch cost and expected profit?
Question 4) If all boots wants to have a 90% cycle service Level (CSL), how many boots should all Boots buy from its Asian supplier?
Solve the given numerical problem and illustrate step by step calculation.