Maths Function

tomtheman

Hi can someone help me figure out how I can calculate this?

https://ibb.co/mBcDuS


From market research, the retailer has estimated that an expected target availability level for items should be 95%. When the availability level decreases, the retailer incurs a penalty (e.g. price reductions, lost future sales, reduced reputation). The retailer has determined that when the availability level decreases to 90%, the profit is reduced by 30% from the profit at the target level On the other hand, increasing the availability level and reducing the variability has significant implications on the supply chain, production and inventory-carrying costs The retailer estimates that for every one percentage point that the availability is allowed to vary from the target level, the unit cost of supplying the item decreases for 0.06 The following data have been collected on an item Price Profit per Item (sold @ 95% availability): €2.00 15.95 (1) Applying Taguchi Lost Function (see appendix), estimate how much variability from the target availability percentage the retailer should allow. Explain each step of your calculation (2) Explain two reasons why the cost of supplying the item decreases with every one percentage point that the availability is allowed to vary from the target level (Note: Formulas related to the Taguchi's loss function are in the appendix)

Thanks