question archive Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events
Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events
Subject:ManagementPrice: Bought3
Sally’s Silk Screening produces specialty T-shirts that are primarily sold at special events. She is trying to decide how many to produce for an upcoming event. During the event, Sally can sell T-shirts for $20 apiece. However, when the event ends, any unsold T-shirts are sold for $4 apiece. It costs Sally $8 to make a specialty T-shirt. Sally’s estimate of demand is the following:
|
Demand |
Probability |
|
300 |
.05 |
|
400 |
.10 |
|
500 |
.40 |
|
600 |
.30 |
|
700 |
.10 |
|
800 |
.05 |
a. What is the service rate (or optimal fractile)?
b. How many T-shirts should she produce for the upcoming event?
