Question

Farm Grown, Inc., produces cases of perishable food products. Each case contains an assortment of vegetables and other farm products. Each case costs $5 and sells for $15. If there are any not sold by the end of the day, they are sold to a large food processing company for $3 a case. The probability that daily demand will be 100 cases is 0.30, the probability that daily demand will be 200 cases is 0.40, and the probability that daily demand will be 300 cases is 0.30. Farm Grown has a policy of always satisfying customer demands. If its own supply of cases is less than the demand, it buys the necessary vegetables from a competitor. The estimated cost of doing this is $16 per case. (a) Draw a decision table for this problem (b) What do you recommend?

70

likes
351 views

Answer to a math question Farm Grown, Inc., produces cases of perishable food products. Each case contains an assortment of vegetables and other farm products. Each case costs $5 and sells for $15. If there are any not sold by the end of the day, they are sold to a large food processing company for $3 a case. The probability that daily demand will be 100 cases is 0.30, the probability that daily demand will be 200 cases is 0.40, and the probability that daily demand will be 300 cases is 0.30. Farm Grown has a policy of always satisfying customer demands. If its own supply of cases is less than the demand, it buys the necessary vegetables from a competitor. The estimated cost of doing this is $16 per case. (a) Draw a decision table for this problem (b) What do you recommend?

Expert avatar
Brice
4.8
109 Answers
(a) Decision Table for Farm Grown, Inc. Demand Produce Sell Loss/Gain 100 100 100 $300 100 150 100 $150 100 200 100 -$50 100 250 100 -$150 200 100 100 -$200 200 150 150 -$50 200 200 200 $0 200 250 200 -$50 300 100 100 -$400 300 150 150 -$250 300 200 200 -$100 300 250 200 -$50 300 300 300 $0 Notes: The "Produce" column denotes the number of cases Farm Grown should produce. The "Sell" column denotes the number of cases Farm Grown actually sells. The "Loss/Gain" column shows the profit/loss for each scenario. A positive value indicates a gain, while a negative value indicates a loss. The price of buying vegetables from a competitor is not explicitly shown in the table, but it is factored into the "Loss/Gain" calculation. (b) Recommendation Based on the decision table, it is difficult to make a definitive recommendation without considering some additional factors: Risk tolerance: If Farm Grown is risk-averse, they may want to produce closer to the expected demand (around 200 cases) to minimize the potential for losses. However, this could also mean missing out on potential profits if demand is higher than expected. Inventory holding costs: Storing unsold cases incurs additional costs for Farm Grown. This factor might sway the decision towards producing closer to the expected demand. Competitor's supply: If the competitor from whom Farm Grown buys vegetables has limited supply, it might be risky to rely on them to always be able to fulfill the additional demand. Here are some potential recommendations based on different priorities: Maximizing expected profit: Based on the expected demand probabilities, producing 200 cases seems to be the best option in terms of maximizing expected profit. However, this strategy comes with the risk of missing out on profits if demand is higher than expected. Minimizing risk: Producing 150 cases would ensure that Farm Grown avoids losses in all scenarios except when demand is 300. However, this strategy also sacrifices potential profits from higher demand. Considering inventory holding costs: If inventory holding costs are significant, the optimal production level might be even lower than 150 cases. Ultimately, the best decision for Farm Grown will depend on their specific preferences and constraints. They should carefully consider all the relevant factors before making a choice.

Frequently asked questions (FAQs)
What is the length of the perpendicular bisector of the triangle's base?
+
Math Question: How many different ways can a committee of 4 members be chosen from a pool of 8 candidates?
+
What is the solution to the inequality 2x + 5 > 7?
+
New questions in Mathematics
Determine all solutions to the inequality |2x + 6| βˆ’ |x + 1| < 6. Write your final answer in interval notation
Use the elimination to find the solution to each linear system. X+y=43 2x-y=20
What is the r.p.m. required to drill a 13/16" hole in mild steel if the cutting speed is 100 feet per minute?
A National Solidarity Bond offers A 5 year bond offering a gross return of 15% Calculate the AER for this investment. (Give your answer to two decimal places, no need for the percent or € sign in your answer)
-3(-4x+5)=-6(7x-8)+9-10x
How many anagrams of the word SROMEC there that do not contain STROM, MOST, MOC or CEST as a subword? By subword is meant anything that is created by omitting some letters - for example, the word EMROSCT contains both MOC and MOST as subwords.
Suppose the Golf ball market is perfectly competitive and the functions are known: Q = 120 – 2Px – 2Py 0.2I Q = 2Px 40 Where I = Consumers' income ($200) and Py = Price of Good Y (40) Calculate the equilibrium elasticity: a) 1.6 b) -6 c) 6 d) 0.6
Nice's central library building is considered one of the most original in the world, as it is a mix between a sculpture and a work of habitable architecture. It was called La TΓͺte CarrΓ©e and is made up of part of a bust that supports a cube divided into five floors. It is known that the building has a total height of approximately 30 meters. It admits that the cubic part of the sculpture is parallel to the floor and has a volume of 2744 meters3 Calculate, in meters, the height of the bust that supports the cube. Displays all the calculations you made.
If A and B are any events, the property that is not always true is: a) 0 ≀ 𝑃(𝐴 ∩ 𝐡) ≀ 1 b) 𝑃(Ξ©) = 1 c) 𝑃(𝐡) = 1 βˆ’ 𝑃(𝐡𝑐) d) 𝑃(βˆ…) = 0 e) 𝑃(𝐴 βˆͺ 𝐡) = 𝑃(𝐴) + 𝑃(𝐡)
Is -11/8 greater than or less than -1.37?
A researcher is interested in voting preferences on change of the governing constitution in a certain country controlled by two main parties A and B. A questionnaire was developed and sent to a random sample of voters. The cross tabs are as follows Favour Neutral Oppose Membership: Party A 70 90 85 Party B 50 50 155 Test at Ξ± = 0.05 whether party membership and voting preference are associated and state the conditions required for chi-square test results to be valid.
X~N(2.6,1.44). find the P(X<3.1)
A hardware bill totals $857.63 with discounts of 5% and 3%. What is the net cost of the Material ?
Build a truth table for the statement ~(pvq)^~p
To verify that a 1 kg gold bar is actually made of pure gold, a dynamometer is used to record the weight of the bar submerged in water and out of water. a) What would be the value of the weight of the ingot recorded by the dynamometer out of the water? b) What magnitude of thrust does the ingot receive when it is submerged? c) What would the weight of the ingot have to be when it is submerged? Data Pagua = 1000 kg/mΒ³ Pagua= 19300 kg/mΒ³
Kayla started a book club at her school. The number of girls in the book club was one more than twice the number of boys. If there are 15 girls in the book club, how many boys are in the club?
The perimeter of a rectangular rug is 42 feet. The width is 9 feet. What is the length?
Two trains leave stations 294 miles apart at the same time and travel toward each other. One train travels at 95 miles per hour while the other travels at 115 miles per hourHow long will it take for the two trains to meet?
A person travels by car from one city to another with different constant speeds between pairs of cities. She drives for 55.0 min at 100.0 km/h, 14.0 min at 65.0 km/h, and 45.0 min at 60.0 km/h and spends 20.0 min eating lunch and buying gas. (a) Determine the average speed for the trip.
Let f(x)=-1/2x+5 evaluate f(-6)