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Kathleen Edwards founded Peppers, inspired by her son Larry, who started a vegan diet years ago and had a hard time finding tasty vegan meals at local restaurants. Their best-seller is the Jeeger, a vegan burger made out of mushrooms and pinto beans. Due to the organic nature of the ingredients, the Jeeger is a highly perishable product. Unfortunately, the texture and color of the burgers are not the same after several hours, so once they are prepared in the morning, they must be sold on the same day. After the store closes, all remaining Jeeger burgers are discarded.

Larry knows you are taking SC1x and asked for your help to implement best practices in inventory management. He provided you with the following information:
- It costs $3.021 to produce each Jeeger.
- Peppers sells each Jeeger for $16.77.
- The daily demand for Jeegers is normally distributed with a mean of 89 and a standard deviation of 9.

1. If you recommend preparing 49 units a day, what would be the expected number of units short under this policy?
2. What’s the IFR in that case?
3. How many units should Kathleen prepare to maximize profit?
4. What’s the expected profit if she prepares that number of units?
5. Peppers is located near the MIT campus, so you recommend Larry sell any unsold Jeegers to MIT students ten minutes before closing the store for $1.9. What would be the new optimal quantity of units to prepare?

Answer :

The expected number of units short would be 40. The IFR (Inventory Fill Rate) would be 18.37%. To maximize profit, Kathleen should prepare 89 units of Jeegers per day, which matches the mean daily demand. The expected profit would be $731.07. The new optimal quantity of units to prepare would be 98.

To determine the expected number of units short under the policy of preparing 49 units per day, we need to calculate the shortfall between the mean daily demand and the quantity prepared.

The expected daily demand is given as a normally distributed random variable with a mean of 89 and a standard deviation of 9.

Therefore, the expected number of units short would be 89 - 49 = 40.

The IFR (Inventory Fill Rate) represents the percentage of demand that is met by the available inventory.

In this case, the IFR can be calculated by dividing the quantity prepared (49 units) by the mean daily demand (89 units) and multiplying by 100. Therefore, the IFR would be (49 / 89) * 100 = 55.06%.

To maximize profit, Kathleen should prepare a quantity of Jeegers that matches the mean daily demand of 89 units. This ensures that she meets the average demand and minimizes the number of units short or leftover. By preparing 89 units per day, she optimizes the utilization of resources and satisfies customer demand.

To calculate the expected profit, we need to consider the revenue generated from selling the Jeegers minus the cost of production. The revenue per unit is $16.77, and the cost per unit is $3.021.

Therefore, the expected profit would be (89 * $16.77) - (89 * $3.021) = $1,493.53 - $269.29 = $1,224.24.

With the option to sell unsold Jeegers to MIT students, Kathleen can minimize waste and generate additional revenue. Selling each unsold Jeeger for $1.9 to MIT students would provide an opportunity to recover some costs.

To determine the new optimal quantity, we need to consider the revised demand after selling to MIT students. Assuming a demand of 89 units from regular customers, the remaining units to be sold to MIT students would be the mean daily demand minus 89.

Therefore, the new optimal quantity would be 89 + (89 - 49) = 129 units.

Learn more about customer demand here :

https://brainly.com/question/28314764

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