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Regression, Forecasting, Minimization

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1. Four alternative manufacturing processes are being considered for our company. The below information on the profitability of the four processes in three different demand levels is provided for your information in order to answer upper management's below listed questions.

Estimated levels of demand
Manufacturing process Low Medium High Exceptional
A. 700 750 850 900
B. 600 750 900 1,000
C. 450 800 950 1,100
D. 350 800 1,000 1,250

Probability .2 .3 .3 .2

a) What is the best manufacturing process according to each of these criteria?

1. Expected value
2. Maximum Payoff
3. Minimum Payoff

b) Which manufacturing process would you choose and explain why. Discuss the logic behind the use of the above methods for management in their decision process.

2. A company has a chain of 12 stores in a large city. Sales figures and profits for the stores are given in the following table. Obtain a regression line for the data and predict profit for a store assuming sales of $10 million.

X Y
Sales Profits
$7 $.15
2 .10
6 .13
4 .15
14 .25
15 .27
16 .24
12 .20
14 .27
20 .44
15 .34
7 .17

3. A bakery uses 700 bags of flour per week and works 45 weeks per year. The flour costs $25 per bag. Each time that and order is issued it will cost the bakery $100. Carrying costs of the inventory are 15% of unit cost. Determine the economic order quantity, reorder point, and the average inventory for this bakery.

4. You work at a fast food establishment that has 20 customers per hour arriving following in an exponential arrival pattern and your store can service customers at a rate of 24 per hour.

a. What is the probability that no requests for assistance are in the system?
b. What is the average number of requests that will be waiting for service?
c. What is the average waiting time in minutes before service begins?

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Four alternative manufacturing processes are being considered for our company. The below information on the profitability of the four processes in three different demand levels is provided for your information in order to answer upper management's below listed questions.

$2.19
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