Scenario 15.1 - The Jerk Store
George takes an eclectic mix of spices to make his authentic jerk seasoning as a rub for chicken,pork,and fish.The ingredients and packaging cost $1.50 and he sells the packets by the case to Jerk Stores in the Caribbean for $2.50 per packet.Tourists to the islands gladly pay $8.75 for these packets,eager to host their friends for an authentic Caribbean meal and bore them with vacation photos upon their return.The demand for the packets is normally distributed,with a mean of 2500 packets and a standard deviation of 600.
-If each Jerk Store location is acting independently,what is their expected profit if they order the optimal quantity?

Question

Quizplus · Accepted Answer

The expected profit is calculated using the newsvendor model, which considers the cost, selling price, and demand distribution. The optimal order quantity maximizes expected profit, which is closest to $13,840.

Scenario 15.1 - the Jerk Store