Demand for jelly doughnuts on Saturdays at Don’s Doughnut Shoppe is shown in the following table....

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Demand for jelly doughnuts on Saturdays at Don’s Doughnut Shoppeis shown in the following table. Demand (dozens) Relative FrequencyDemand (dozens) Relative Frequency 19 .01 25 .10 20 .05 26 .11 21.12 27 .10 22 .18 28 .04 23 .13 29 .02 24 .14 a-1. Determine theoptimal number of doughnuts, in dozens, to stock if labor,materials, and overhead are estimated to be $3.80 per dozen,doughnuts are sold for $5.15 per dozen, and leftover doughnuts atthe end of each day are sold the next day at half price. (Roundyour answer to the nearest whole number.) Optimal number ofdoughnuts a-2. What is the resulting service level? (Round youranswer to 2 decimal places.) Service level

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3.6 Ratings (556 Votes)

The problem will be solved using newsvendor model Critical ratio under profit maximization in case of newsvendor model will be defined as Critical Ratio Cu Cu Co Where Cu Underage cost ie cost of ordering one fewer unit than what one would have ordered See Answer

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