7. Sunshine company produces oranges. In Spring, Sunshine needs to contract with Moonlight company to sell all the orang

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7 Sunshine Company Produces Oranges In Spring Sunshine Needs To Contract With Moonlight Company To Sell All The Orang 1 (124.14 KiB) Viewed 121 times

7. Sunshine company produces oranges. In Spring, Sunshine needs to contract with Moonlight company to sell all the oranges, which will be harvested in Fall. The quantity of oranges is uncertain and follows a normal distribution with a mean of 500 tons and a standard deviation of 100 tons. For the current contract, Sunshine must specify how many tons it promises to sell to Moonlight in the Fall. Sunshine is prohibited to sell to anyone else. The selling price for each ton of oranges is $100, and Sunshine will pay a penalty of $100 for each ton that is short of what it promises to deliver. Moonlight will not purchase any amount that is more than the promised number. Assume that the cost for processing oranges is simplified to 0. (a) How much should Sunshine company promise to sell and deliver to Moonlight? An error within +5 is allowed. (4 points) (b) Suppose when Sunshine cannot harvest and process up to the amount they promise to deliver, they can make up for the shortfall by buying from another grower at a price of $140. How much should Sunshine promise to sell and deliver? An error within 65 is allowed. (4 points) (c) Forget about the assumptions in (b). Suppose for any amount that is more than the promised number, Moonlight is willing to pay $50 for each ton. How much should Sunshine promise to sell and deliver? An error within +5 is allowed. (4 points) 6 MacBook Pro Zlat- P