Alex sells hotdog at $5 at the Piazza on the Christmas day (Dec. 25). As the supplier requires a firm order by the after
Posted: Fri May 20, 2022 8:11 am
Alex sells hotdog at $5 at the Piazza on the Christmas day (Dec.
25). As the supplier requires a firm order by the afternoon of Dec.
24, Alex must make a commitment before the demand is known. The
supplier's wholesale price is $3 per unit of hotdog. Alex forecasts
that the daily demand is normally distributed with mean 220 units
and standard deviation 50. Any hotdog left by the end of Christmas
day can be sold for only $2 per unit.
Alex’s supplier now offers a revenue sharing contract with the
supplier such that Alex has to pay $0.5 to the supplier for each
hotdog sold at the regular price of $5. Compared to the original
wholesale price contract, how will the new contract change his
ordering decision in any way (assuming other parameters remain as
before)?
Group of answer choices
The overage cost
The fixed ordering cost
Nothing has been changed
The best inventory model to use
The underage cost
25). As the supplier requires a firm order by the afternoon of Dec.
24, Alex must make a commitment before the demand is known. The
supplier's wholesale price is $3 per unit of hotdog. Alex forecasts
that the daily demand is normally distributed with mean 220 units
and standard deviation 50. Any hotdog left by the end of Christmas
day can be sold for only $2 per unit.
Alex’s supplier now offers a revenue sharing contract with the
supplier such that Alex has to pay $0.5 to the supplier for each
hotdog sold at the regular price of $5. Compared to the original
wholesale price contract, how will the new contract change his
ordering decision in any way (assuming other parameters remain as
before)?
Group of answer choices
The overage cost
The fixed ordering cost
Nothing has been changed
The best inventory model to use
The underage cost