Problem 1" model by substituting numbers into the model to examine the relationships between ordering quantity and profit. We can therefore plot a graph show in Exhibit 1. As show in the graph, the optimal stocking quantity occurs between and Another way to acquire the optimal stocking quantity is to use the add-in Solver function provided in Excel.
Compare the optimal profit under this scenario with the optimal profit derived in Problem 1. Problem 3 Becoming extremely busy over the next few months, Sheen decided to hand over the retailing portion of her business to another Hamptonshire resident.
Ralph Armentrout offered to run the newsstand from 6 a. He was to estimate expected demand for the Express on the basis of a copy viewed at 10 p. Armentrout was responsible for any newspapers left unsold at the end of the Hamsptonshire express.
Why does the optimal stocking quantity differ from the optimal stocking quantity identified in Problem 2? Is the result here consistent with the newsvendor formula?
How does Hamsptonshire express optimal effort in this question differ from the answer to question 2.
Problem 4 The Express was firmly established as the town newspaper after around a year of operation. Expected daily demand remained atthe standard deviation of daily demand at Armentrout was responsible for unsold newspapers.
Having virtually no competition from other newsstands and being firmly established in his store at the intersection of Center and Main Streets, Armentrout broadened his product line, diversifying into coffee, soft drinks, and breakfast items such as muffins and bagels. He had become friendly with a number of customers who often stopped to discuss the latest news in the Express.
Inspired by the success of the Express and his newsstand, Armentrout decided to launch his own private-label newspaper. Hence, he carried no inventory, instead making copies as customers demanded them.
Sheen believed that the Private posed no threat to the Express.
If you were Armentrout, how many copies of the Express would you stock? Compare your stocking decision with the optimal decision in Problem 3a.
Why does the optimal stocking quantity differ from the answers given in Problems 1, 2, and 3? How is this answer consistent with the logic of the newsvendor model? To get a better idea of true profitability for each product, he decided to allocate the cost of real estate according to the space occupied by each product.
If he figured daily real estate costs for each additional newspaper at approximately 3 cents, how would this affect his stocking decision? Answer this question qualitatively. Problem 5 Responding to competition from the Private, Sheen invested in an advertising campaign, aimed at making customers more loyal to the Express.
As a result of the ad campaign, few customers were willing to switch to the Private when Armentrout stocked out of the Express, choosing instead to not purchase either the Express or the Private.
Owing to higher customer loyalty to the Express, demand for the Private was low, and Armentrout eventually decided to stop publishing the Private.
Thus, the situation in Hamptonshire reverted to the scenario described in problem 3 above i.
When Sheen spoke to Armentrout about stocking more copies of the Express, he pointed out that he was stocking what was optimal for his newsstand. You could even sell me all the newspapers on consignment [i.
I will surely buy more if you buy back unsold newspapers. What buy-back price would maximize channel profit? How much does Armentrout stock under this buy-back plan? Identify the combination of transfer price and buy-back price that maximizes expected daily profit for the channel.
How does this number compare with expected daily profit for the channel in Problem 2 i. Specifically, she wondered if she, rather than Armentrout, could decide how much to stock at the newsstand.
Why should I pay him a commission if he does not have stocking decision rights?The Hamptonshire Express emphasized local news which Sheen believed was not adequately covered by big-city newspapers such as the The Philadelphia Inquirer, Pittsburgh PostGazette, and .
The optimal stocking quantity is according to the spreadsheet in the simulation, which is a decrease from in problem #3 because in the event that the Express stocks out, Ralph still makes a profit from 40% of customers who will buy the Private.
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Arjun R. Sabhaya Production Hamptonshire Express October 16, PROBLEM #1 A. The simulated function given in the Excel spreadsheet “Hamptonshire Express: Problem_#1” allows the user to find the optimal quantity of newspapers to be stocked at the newly formed Hamptonshire Express Daily Newspaper.
Anna Sheen estimated the daily demand of newspapers to . Arjun R.
Sabhaya Production Hamptonshire Express October 16, PROBLEM #1 A. The simulated function given in the Excel spreadsheet “Hamptonshire Express: Problem_#1” allows the user to find the optimal quantity of newspapers to be stocked at the newly formed Hamptonshire Express Daily Newspaper.
Problem #1 A. How many newspapers should Sheen stock? Use the simulation in the spreadsheet “Hamptonshire Express: Problem #1” to identify the optimal stocking quantity.