Hamptonshire Express

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 |

3.5 | $ 371.16 |

3.75 | $ 371.29...