Question
A restaurant produces fresh burgers for its customers every day. The company is known for supplying fresh burgers and never uses burgers prepared on the previous day. Demand for burgers is uncertain, preparation capacity is limited, and the restaurant has the option of producing 0, 100, 200, 300 and 400 burgers every day. It has been estimated that the cost of producing each burgers pack is Rs.15. Each burger is sold for Rs. 20. Prepare a payoff matrix when 0, 100, 200, 300 or 400 demands of the burgers turn up on any given day. Prepare an opportunity loss table and hence find the optimum strategy.
Answer :
Word Count : 587
Let’s solve this step by step manually. Step 1: Define production levels and possible demands Production levels (strategies): 0, 100, 200, 300, 400 burgers Demand levels (states of nature): 0, 100, 200, 300, 400 burgers Step 2: Calculate profit (payoff) for each combination Profit formula: [ \text{Profit} = (\text{Selling Price} \times \min(\text{Production}, \text{Demand})) - (\text{Cost Price} \times \text{Production}) ] Selling price = Rs. 20 per burger Cost price = Rs. 15 per burger Now, we calculate profit for each combination: * Production = 0 All profits = 0 (no burgers produced) * Production = 100 * Demand 0 → Profit = (20*0 - 15*100 = -1500) * Demand 100 → Profit = (20*100 - 15*100 = 500) * Demand 200 → Profit = (20*100 - 15*100 = 500) * Demand 300 → Profit = 500 * Demand 400 → Profit = 500 * Production = 200 ________ _____ ____ ____ ___ ____ _______.
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Let’s solve this step by step manually. Step 1: Define production levels and possible demands Production levels (strategies): 0, 100, 200, 300, 400 burgers Demand levels (states of nature): 0, 100, 200, 300, 400 burgers Step 2: Calculate profit (payoff) for each combination Profit formula: [ \text{Profit} = (\text{Selling Price} \times \min(\text{Production}, \text{Demand})) - (\text{Cost Price} \times \text{Production}) ] Selling price = Rs. 20 per burger Cost price = Rs. 15 per burger Now, we calculate profit for each combination: * Production = 0 All profits = 0 (no burgers produced) * Production = 100 * Demand 0 → Profit = (20*0 - 15*100 = -1500) * Demand 100 → Profit = (20*100 - 15*100 = 500) * Demand 200 → Profit = (20*100 - 15*100 = 500) * Demand 300 → Profit = 500 * Demand 400 → Profit = 500 * Production = 200 ________ _____ ____ ____ ___ ____ _______.
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