The Farmer’s Fridge kitchen in Jersey City serves 100 fridge…

The Farmer’s Fridge kitchen in Jersey City serves 100 fridges across the greater metropolitan area. For simplicity assume each fridge requires on average 12 lbs/day of lettuce with a standard deviation of 8 lbs/day.  The kitchen sources lettuce from vertical green houses in Canada for about $1.50/lb. It orders every 2 days and the lead time is 2 days.  A typical salad generates $9 in profits and requires 1/4 lb of lettuce. Any lettuce left on-hand at the end of the 2-day period is 4 days old, too old to put into salads. The company donates the old lettuce to the local food bank and is able to write off 20% of the cost.  Question: What regime should the kitchen use to manage it’s inventory of lettuce? Re-order point or Order-up-to level? Question: The kitchen has 200 lbs of lettuce on hand and an outstanding order for 2,400 lbs en route from Canada. How many pounds of lettuce should the kitchen order to best manage its availability and obsolescence? Question: How much profit does Farmer’s Fridge expect to lose each year because the kitchen has too little lettuce? Question: How many lbs of lettuce can the food back expect to receive from the Farmer’s Fridge kitchen each year?

The Farmer’s Fridge kitchen in Jersey City serves 100 fridge…

The Farmer’s Fridge kitchen in Jersey City serves 100 fridges across the greater metropolitan area. For simplicity assume each fridge requires on average 8 lbs/day of lettuce with a standard deviation of 4 lbs/day.  The kitchen sources lettuce from vertical green houses in Canada for about $1.50/lb. It orders every 2 days and the lead time is 2 days.  A typical salad generates $9 in profits and requires 1/4 lb of lettuce. Any lettuce left on-hand at the end of the 2-day period is 4 days old, too old to put into salads. The company donates the old lettuce to the local food bank and is able to write off 20% of the cost.  Question: What regime should the kitchen use to manage it’s inventory of lettuce? Re-order point or Order-up-to level? Question: The kitchen has 100 lbs of lettuce on hand and an outstanding order for 1,600 lbs en route from Canada. How many pounds of lettuce should the kitchen order to best manage its availability and obsolescence? Question: How much profit does Farmer’s Fridge expect to lose each year because the kitchen has too little lettuce? Question: How many lbs of lettuce can the food back expect to receive from the Farmer’s Fridge kitchen each year?

Farmer’s Fridge is concerned with stocking the fridge at the…

Farmer’s Fridge is concerned with stocking the fridge at the Metropolitan Museum. Table 1. gives prices, costs, expected demands and standard deviation in demands for the three types of salads.  Table 1. Price, cost, expected demand and standard deviation in demand for each product Product Price Cost Mean Std Dev Steakhouse Chopped Salad $15.00 $5.00 20 25 Apple Pecan Salad $10.00 $3.00 60 30 Greek Salad $12.00 $4.00 60 20 Assume Normal Distributions. The fridge at the Metropolitan Museum holds at most 150 salads.  Question: How should the company stock the fridge to maximize its expected profits? Ignore integrality.  Number of Steakhouse Chopped Salads to stock: Number of Apple Pecan Salad to stock: Number of Greek Salads to stock: Question: What are the company’s maximum expected Revenues? Question: What fraction (%) of the products the company stocks should the company expect to compost?