Operations Research208210 marksNumerical: Marginal analysis EVPIMarginal analysis approach
Question A small cafe sells freshly made vegetable sandwiches each day. Unsold sandwiches cannot be stored overnight and thus become worthless at the end of the day. Following is the distribution of the daily demand for sandwiches observed over 100 days. | Daily demand | 220 | 230 | 240 | 250 | 260
Question
A small cafe sells freshly made vegetable sandwiches each day. Unsold sandwiches cannot be stored overnight and thus become worthless at the end of the day. Following is the distribution of the daily demand for sandwiches observed over 100 days.
| Daily demand | 220 | 230 | 240 | 250 | 260 |
|---|---|---|---|---|---|
| No. of days | 5 | 20 | 30 | 35 | 10 |
(a) Find the optimal quantity that will maximize the expected profit.
(b) Find the expected profit with perfect information (EPPI).
(c) Find the expected value of perfect information (EVPI).
[10]
Daily Demand 220 230 240 250 260 ------------------ No. of Days 5 20 30 35 10 Probability 0.05 0.20 0.30 0.35 0.10 Total days = 100, so probability = frequency/100. Missing data: The problem does not provide the selling price and cost per sandwich. These are essential to compute a profit-based pa...