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Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the next day. Hint: since newsvendor, there is no minimum inventory level. Think profit maximizing quantity instead. Calculate the appropriate order quantities for the Aberdeen and Jordan stores. Note you will calculate between 2 and 4 quantities based on your answer above. EXHIBIT 2: JUNE 2012 SALES VOLUME FOR SPECIALTY BUNS FOR ABERDEEN STORE AND JORDAN MTR STORE** EXHIBIT 3: AVERAGE SELLING PRICE AND AVERAGE PRODUCT COST** Average Selling Price Average Out-of-Factory Cost Day of Week Thursday Frilay Specialty Buns HKD 7.80 HKD 3.12 June 1 2 3 4 5 6 7 ** Disguised data 8 9 EXHIBIT 1: TIME FOR PLACING ORDERS AND DELIVERY TIME Category Order by Delivery Time 9:30 pm on first day Specialty Buns Sliced Loaf Bread First delivery on third day Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Aberdeen Store 966 1,047 927 952 1.033 1,315 1,219 1,232 1.399 1,216 1,216 1,388 1.230 1.250 1,145 1.213 1.034 1,083 1,222 1,118 1.292 1,128 1,044 1,007 901 1,107 1,140 1,231 1.272 1,052 Jordan MTR Store 2,542 3,010 1.626 1,677 2.754 3.900 3.480 3,569 4.198 2.283 2.238 4,029 3,406 3,561 3,193 3,489 1,870 1,967 3,390 3,094 3,360 3,109 2,912 1,938 1,571 3,046 3,206 3,554 3,808 2,992 Specialty Cakes Large Cakes 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 4:00 pm on first day 9:30 pm on first day Second delivery on second day Third delivery on second day Source: Mui Chiu, district manager, Arome Bakery, interview by author, Hong Kong, 25 May 2012 Solve as a newsvendor problem. There is no open inventory level. Only cakes could be saved for the next day. Hint: since newsvendor, there is no minimum inventory level. Think profit maximizing quantity instead. Calculate the appropriate order quantities for the Aberdeen and Jordan stores. Note you will calculate between 2 and 4 quantities based on your answer above. EXHIBIT 2: JUNE 2012 SALES VOLUME FOR SPECIALTY BUNS FOR ABERDEEN STORE AND JORDAN MTR STORE** EXHIBIT 3: AVERAGE SELLING PRICE AND AVERAGE PRODUCT COST** Average Selling Price Average Out-of-Factory Cost Day of Week Thursday Frilay Specialty Buns HKD 7.80 HKD 3.12 June 1 2 3 4 5 6 7 ** Disguised data 8 9 EXHIBIT 1: TIME FOR PLACING ORDERS AND DELIVERY TIME Category Order by Delivery Time 9:30 pm on first day Specialty Buns Sliced Loaf Bread First delivery on third day Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Aberdeen Store 966 1,047 927 952 1.033 1,315 1,219 1,232 1.399 1,216 1,216 1,388 1.230 1.250 1,145 1.213 1.034 1,083 1,222 1,118 1.292 1,128 1,044 1,007 901 1,107 1,140 1,231 1.272 1,052 Jordan MTR Store 2,542 3,010 1.626 1,677 2.754 3.900 3.480 3,569 4.198 2.283 2.238 4,029 3,406 3,561 3,193 3,489 1,870 1,967 3,390 3,094 3,360 3,109 2,912 1,938 1,571 3,046 3,206 3,554 3,808 2,992 Specialty Cakes Large Cakes 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 4:00 pm on first day 9:30 pm on first day Second delivery on second day Third delivery on second day Source: Mui Chiu, district manager, Arome Bakery, interview by author, Hong Kong, 25 May 2012

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