The national coffee store Farbucks needs to decide in August how many holiday-edition insulated coffee mugs to order. Because the mugs are dated, those that are unsold by January 15 are considered a loss. These premium mugs sell for $23.95 and cost $6.75 each. Farbucks is uncertain of the demand. They believe that there is a25% chance that they will sell 10,000 mugs, a 50% chance that they will sell 15,000, and a 25% chance that they will sell 20,000.
a) Build a linked-tree in PrecisionTree to determine if they should order 12,000, 15,000, or 18,000 mugs. Be sure that your model does not allow Farbucks to sell more mugs than they ordered. You can use the IF( ) command in Excel ® . If demand is less than the order quantity, the amount sold is the demand. Other-wise, the amount sold is the order quantity.
b) Now, assume that any unsold mugs are discounted and sold for $5.How does this affect the decision?
This question was answered on: Jul 11, 2017
Need a similar solution fast, written anew from scratch? Place your own custom order
We have top-notch tutors who can help you with your essay at a reasonable cost and then you can simply use that essay as a template to build your own arguments. This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student. New solution orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.