Question - Optimizing Card Orders for SEE Gift and Things
Solution:
The image contains a word problem that asks how many anniversary cards the manager of SEE Gift and Things should order before the month of June. Let's solve this step by step:1. Each card costs $1.30 and retails for $2.20. After June, the store reduces the price by 60 percent to get rid of them.First, we need to find out the reduced price of each card after the 60 percent discount. A 60 percent reduction means the customer pays 40 percent (100% - 60% = 40%) of the original retail price.Reduced price = 40% of $2.20Reduced price = 0.40 * $2.20Reduced price = $0.882. On the basis of past records, the manager has determined that the demand for these cards is 4,000 units with a standard deviation of 800.This means that the manager expects to sell 4,000 cards but there might be some variation (more or less) as indicated by the standard deviation.3. The problem now is to calculate how many cards to order. A common approach for this kind of problem is to account for variation in demand. However, the question does not give a service level or probability, so we'll have to assume the manager wants to meet the expected demand without considering the variability (standard deviation). Thus, the manager should order the expected demand:Number of cards to order = Expected demand = 4,000 cardsTherefore, the manager should order 4,000 cards.
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