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14. A designer is planning orders for its annual limited-edition ornament. Demand has been forecast to be normally

14. A designer is planning orders for its annual limited-edition ornament. Demand has been forecast to be normally

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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# Determining the Optimal Level of Product Availability ### 12. LGC Manufacturing Problem An LGC manufacturer designs boxes with a normal distribution demand (mean: 25,000, standard deviation: 8,000). Each box costs $10 to make and sells for $20. Unsold boxes at the season's end are discounted to $8. a. **Calculating Quantity and Expected Profit:** - Determine how many boxes the manufacturer should produce. - Calculate the expected profit based on production quantity. b. **Discounting and Demand:** - Compute expected sales with discounts. - Analyze the option to postpone chocolate production from packaging. c. **Additional Cost of Postponement:** - Evaluate the indifference point for LGC concerning added postponement costs. ### 13. The Knitting Company (TKC) Planning Problem TKC plans to produce four winter sweater styles with varying demand distributions. a. **Production and Profit:** - Estimate the number of each sweater type to manufacture. - Calculate expected profits from these quantities. b. **Discount Impact:** - Assess how many sweaters TKC will sell at a discount. c. **Postponement Option:** - Analyze the impact and expected profit of postponing sweater manufacturing. - Evaluate another option for partial postponement. ### 14. Designer's Limited-Edition Ornament Planning Demand for ornaments has a mean of 20,000 with a standard deviation of 8,000. Each costs $30 to produce and $95 to sell. The selling price drops to $28 at season’s end if 25,000+ are ordered. a. **Optimal Production:** - Calculate the optimal number of ornaments to produce. - Determine expected profits based on this production level. b. **Season-End Discounting Decision:** - Advise on whether to discount to $28 per ornament based on producer’s order size. ### 15. Publisher’s Calendar Printing Problem Calendars have a normal demand distribution (mean: 70,000, standard deviation: 25,000). Production cost per calendar is $3, selling price is $10. Unsold calendars are recycled. a. **Production and Profit Analysis:** - Determine optimal print quantity. - Calculate expected profits. b. **Discounted Printing Cost Offer:** - Analyze printing cost reduction if 100,000+ are ordered. -
Transcribed Image Text:# Determining the Optimal Level of Product Availability ### 12. LGC Manufacturing Problem An LGC manufacturer designs boxes with a normal distribution demand (mean: 25,000, standard deviation: 8,000). Each box costs $10 to make and sells for $20. Unsold boxes at the season's end are discounted to $8. a. **Calculating Quantity and Expected Profit:** - Determine how many boxes the manufacturer should produce. - Calculate the expected profit based on production quantity. b. **Discounting and Demand:** - Compute expected sales with discounts. - Analyze the option to postpone chocolate production from packaging. c. **Additional Cost of Postponement:** - Evaluate the indifference point for LGC concerning added postponement costs. ### 13. The Knitting Company (TKC) Planning Problem TKC plans to produce four winter sweater styles with varying demand distributions. a. **Production and Profit:** - Estimate the number of each sweater type to manufacture. - Calculate expected profits from these quantities. b. **Discount Impact:** - Assess how many sweaters TKC will sell at a discount. c. **Postponement Option:** - Analyze the impact and expected profit of postponing sweater manufacturing. - Evaluate another option for partial postponement. ### 14. Designer's Limited-Edition Ornament Planning Demand for ornaments has a mean of 20,000 with a standard deviation of 8,000. Each costs $30 to produce and $95 to sell. The selling price drops to $28 at season’s end if 25,000+ are ordered. a. **Optimal Production:** - Calculate the optimal number of ornaments to produce. - Determine expected profits based on this production level. b. **Season-End Discounting Decision:** - Advise on whether to discount to $28 per ornament based on producer’s order size. ### 15. Publisher’s Calendar Printing Problem Calendars have a normal demand distribution (mean: 70,000, standard deviation: 25,000). Production cost per calendar is $3, selling price is $10. Unsold calendars are recycled. a. **Production and Profit Analysis:** - Determine optimal print quantity. - Calculate expected profits. b. **Discounted Printing Cost Offer:** - Analyze printing cost reduction if 100,000+ are ordered. -
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