Store A uses the newsvendor model to manage its inventory. Demand for its product is normally distributed with a mean of 500 and a standard deviation of 300. Store A purchases the product for $10 each unit and sells each for $25. Inventory is salvaged for $5. What is its maximum profit? $12,500 $8000 $5000 $7500

Answers

Answer 1

Answer:

Answer:

maximum profit = 10500

Explanation:

The newsvendor model is a statistical model used to manage inventory and determine the appropriate amount of inventory. So first of all we determine the optimal inventory level then we use it to find maximum profit. In order to determine optimal inventory level we first have to find possible variability in demand, for that we use the critical fractile formula which is as follows:

f= cu/cu+co

cu= underage cost = price - cost = $25 -$10 = $15

co= overage cost = cost - salvage value = $10 -$5 = $5

f= 15/15+5

f= 0.75

If we look at the standard normal cumulative distribution table 0.75 is equal to z= 0.67.

Q = Mean+ (z* standard deviation)

Optimal inventory = 500 + (0.67* 300)

Optimal inventory = 701 units

WE ROUND OFF THE UNITS TO 700.

Now we calculate maximum profit as follows:

maximum profit = contribution * Q

maximum profit = ($25 - $10) * 700

maximum profit = 10500

Related Questions

Tina is an expert gardener. she provides services like setting up new gardens, maintaining gardens, and landscaping. in the context of service processes, the services provided by tina come under the category of
Type the correct answer in the box. Spell all words correctly.Which process does a court use to select a jury?The court selects a jury from a jury pool through a process known as _____.
Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below: Sales $17,600,000 Net operating income $6,200,000 Average operating assets $36,000,000Required:a. Compute the margin for Alyeska Services Company.b. Compute the turnover for Alyeska Services Company.c. Compute the return on investment (ROI) for Alyeska Services Company.
Traditionally, the music industry signed multi-year contracts with artists and sold copyright-protected music through established distribution channels. A shift to the digital format and the rise of Internet technology have resulted in the sharing of music over peer-to-peer networks, a practice the industry calls "piracy." In recent years, the music industry has seen a rapid decline in the number of CDs sold. At the same time, the ownership of the distribution rights of musical content under copyright laws remains clear. Attempts at innovation by individual record labels to offer music as direct downloads to consumer are quickly copied by other labels. Based on these factors, the best assessment is that the music industry has shifted from a __________ to a __________ cycle market.a) slow; fastb) slow; standardc) standard; slowd) standard; fast
Midlands Inc. had a bad year in 2019. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 75,000 units of product: net sales $1,500,000; total costs and expenses $1,780,200; and net loss $280,200. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,106,000 $598,000 $508,000 Selling expenses 522,200 95,000 427,200 Administrative expenses 152,000 57,000 95,000 $1,780,200 $750,000 $1,030,200 Management is considering the following independent alternatives for 2020. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,010 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (a) Compute the break-even point in dollars for 2019.

Benton Company issues $10,000,000 of 10-year, 9% bonds on April 1, 2017 at 95 plus accrued interest. The bonds are dated January 1, 2017, and pay interest on June 30 and December 31. What is the total cash received on the issue date?

Answers

Answer:

$9,725,000

Explanation:

The total cash received on the issue date is made of 95% of the bond's face value of $10,000,000 plus the three-month interest up to April 1 2017.

95% of face value=95%*$10,000,000=$9,500,000

three month interest accrued=$10,000,000*9%*3/12=$225,000

Total cash proceeds from bond issue=$9,500,000+$225,000

Total cash proceeds from bond issue=$9,725,000

If you were a career woman and time for you to love to do becomes a problem,which would you prefer to use of your baking needs— a commercial prepared mix or a home prepared mix?What important factors did you consider in making your choice?

Answers

Answer:

Just Choose an side.

Explanation:

Would you rather use a store-bought mix, or a homemade mix? (Just choose one).

For homemade: I chose this because I would like to try something new and make different flavors, if it is a success.

For store-bought: I chose this because I want it to be easy for me to make, and has all the steps on the back of the box.

Mankiw discusses Giffen goods as a possible counterexample to the law of demand. Although not explicitly mentioned by Mankiw, Veblen goods are another possible exception to the law of demand. Perform a quick web search to answer the following: a. What is a Veblen good?
b. What is an example of a Veblen good?
c. Why do some consumers purchase Veblen goods?

Answers

Answer:

Find the answers below

Explanation:

A. Veblen goods are luxury goods sought after by wealthy people and for which these category of people increase their demand as the prices of the good increase (in contrast to the popular law of demand).

2. Examples are luxury houses or cars, jewelry etc.

3. Some customers buy these type of goods in order to show how wealthy they are or show their status.

Final answer:

A Veblen good is a luxury good that defies the law of demand by having an upward-sloping demand curve. An example is a luxury brand handbag. Some consumers purchase Veblen goods as a status symbol and for the exclusivity they confer.

Explanation:

a. A Veblen good is a type of luxury good that has an upward-sloping demand curve, meaning that as the price of the good increases, the quantity demanded also increases. This is contrary to the law of demand, which states that as the price of a good increases, the quantity demanded decreases.

b. An example of a Veblen good is a luxury brand handbag. As the price of the handbag increases, the demand for it also increases, as some consumers perceive the higher price as a status symbol and are willing to pay more for it.

c. Some consumers purchase Veblen goods because they derive satisfaction from owning and displaying luxury items as a symbol of their status and wealth. The higher price of Veblen goods can make them more desirable to certain consumers, as it signifies exclusivity and scarcity.

Learn more about Veblen goods here:

brainly.com/question/24097728

#SPJ12

ndicate whether the following items are "Included in" or "Excluded from" gross income. a. During the year, that the taxpayer purchased stock as an investment which doubled in value. b. Amount an off-duty motorcycle police officer received for escorting a funeral procession. c. While his mother was in the hospital, the taxpayer sold some of her jewelry at a gain to help pay for the hospital bills. d. Child support payments received. e. A damage deposit the taxpayer recovered when he vacated the apartment he had rented. f. Interest received by the taxpayer on an investment in general purpose bonds issued by IBM. g. Amounts received by the taxpayer, a baseball "Hall of Famer," for autographing sports equipment (e.g., balls and gloves). h. Tips received by a bartender from patrons. (Taxpayer is paid a regular salary by the cocktail lounge that employs him.) i. Taxpayer sells his Super Bowl tickets for three times what he paid for them. j. Taxpayer receives a new BMW from his grandmother when he passes the CPA exam.

Answers

Answer:

Gross income refers to the income of an individual before taxes or any other deductions. It includes all type of income from all sources.

The list is as follows:

a. Excluded from

b. Included in

c. Included in

d. Excluded from

e. Excluded from

f. Included in

g. Included in

h. Included in

i. Included in

j. Excluded from

Suppose the reserve requirement (R) is 15%. What is the effect on total checkable deposits in the economy if bank reserves increase by $60 billion. Assume E=0

Answers

Answer:

$400 billion

Explanation:

The computation on the impact on total checkable deposits is shown below

= Increased in the bank reservce ÷ reserve requirement

= $60,000,000,000 ÷ 15%

= $400 billion

Therefore the impact on the total checkable deposits in the case when the bank reserves rises is $400 billion

We simply applied the above formula so that the correct value could come

And, the same is to be considered

In 2017, Oriole Corporation reported net income of $1,004,700. It declared and paid preferred stock dividends of $278,600. During 2017, Oriole had a weighted average of 200,700 common shares outstanding. Compute Oriole’s 2017 earnings per share.

Answers

Answer:

$3.62

Explanation:

The dividend distributed to common share = total net income - dividend for preferred stock

= $1,004,700 - $278,600

= $726,100

Earnings per share (EPS) = The dividend distributed to common share / common shares outstanding

= $726,100/ 200700

= $3.62

Other Questions

On December 31, Year 3 Snack, Inc. adjusted its records to recognize $5,000 of accrued salaries. Based on this information alone. A.the balance sheet at the beginning of Year 4 would show $5,000 of accrued salaries expense. B.the balance sheet at the beginning of Year 4 would show $5,000 of accrued salaries payable.C.the income statement for Year 3 would show $5,000 of accrued salaries payable. D.the income statement for Year 4 would show $5,000 of accrued salaries expense.

In the initial Cournot duopoly equilibrium, both firms have constant marginal costs, m, and no fixed costs, and there is a barrier to entry. Show what happens to the best-response function of firms if both firms now face a fixed cost of F Let market demand be p-a -bQ, where a and b are positive parameters with 2 firms. Let q1 and q2 be the amount produced by firm 1 and firm 2, respectively. Assuming it is optimal for the firm one to produce, its best-response function is I. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. Eg., a subscript can be created with the- q1 = character.)

The first step in the project control process for measuring and evaluating project performance is to ch13 Select one: a. Determine the project objectives. b. Determine the project deliverables. c. Analyze the project budget. d. Set a baseline plan e. Review the project priority matrix.

Pro Formas can be structured in many different formats; however, they all help forecast a company’s financial feasibility, breakeven, and profitability. How do you envision this knowledge and skill with pro formas will give you an advantage over other job candidates?