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Hamptonshire Express Case

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Problem 1

1a) Using the model “Hamptonshire Express: Problem 1,” Xxx calculated the optimal stocking quantity to be 584 newspapers, which is expected to produce daily profit of $331.4364. A quantity of 583 newspapers produces a expected daily profit of $331.4353 and a quantity of 585 newspapers produces an expected daily profit of $331.4347. The model inputs and a sensitivity analysis are shown below:

Stocking Quantity | Expected Profit/day | 580 | $ 331.415 | 581 | $ 331.425 | 582 | $ 331.431 | 583 | $ 331.435 | 584 | $ 331.436 | 585 | $ 331.435 | 586 | $ 331.430 | 587 | $ 331.423 | 588 | $ 331.413 | 589 | $ 331.400 | 590 | $ 331.385 |

1b) The value derived in part (a) is consistent with the optimal stocking quantity in the newsvendor model as demonstrated by the calculations below:

INSERT CALCULATIONS – David?

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Problem 2

a) Using the model “Hamptonshire Express: Problem 2,” Xxx calculated via trial and error that the expected profit/day is highest for when the number of hours invested equals four (h=4). The model parameters are shown below as well as a summary of the results of the trial and error analysis.

#hrs | Expected Profit/day | 2 | $ 367.91 | 2.25 | $ 368.84 | 2.5 | $ 369.58 | 2.75 | $ 370.17 | 3 | $ 370.61 | 3.25 | $ 370.94 |

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