International retail store. Shopmart's managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Shopmart $2,500,000 per month and $45 per order. Shopmart has two options, a partially automated B2B and a fu automated B2B system. The partially automated B2B system will have a fixed cost of $15,000,000 per month and a variable cost of $35 per order. The fully automated B2B system has a fixed cost of $33,000,000 per month and a variable cost of $20 per order. Based on data from the past 2 years, Shopmart has determined the following distribution on monthly orders: (Click the icon to view the data.) Read the requirements. Order level 300,000 orders 500,000 orders Current plan Total monthly cost of orders *** * Probability = M Total expected cost of orders 4
International retail store. Shopmart's managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Shopmart $2,500,000 per month and $45 per order. Shopmart has two options, a partially automated B2B and a fu automated B2B system. The partially automated B2B system will have a fixed cost of $15,000,000 per month and a variable cost of $35 per order. The fully automated B2B system has a fixed cost of $33,000,000 per month and a variable cost of $20 per order. Based on data from the past 2 years, Shopmart has determined the following distribution on monthly orders: (Click the icon to view the data.) Read the requirements. Order level 300,000 orders 500,000 orders Current plan Total monthly cost of orders *** * Probability = M Total expected cost of orders 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:Shopmart is an international retail store. Shopmart's managers are considering implementing a
new business-to-business (B2B) information system for processing merchandise orders. The current system costs
Shopmart $2,500,000 per month and $45 per order. Shopmart has two options, a partially automated B2B and a fully
automated B2B system. The partially automated B2B system will have a fixed cost of $15,000,000 per month and a
variable cost of $35 per order. The fully automated B2B system has a fixed cost of $33,000,000 per month and a
variable cost of $20 per order. Based on data from the past 2 years, Shopmart has determined the following
distribution on monthly orders:
(Click the icon to view the data.)
Read the requirements.
Order level
300,000 orders
500.000 orders
Current plan
Total monthly cost
of orders
***
x Probability
X
=
m
Total expected
cost of orders
A

Transcribed Image Text:Data table
Monthly Number of Orders
300,000 orders
500,000 orders
700,000 orders
Print
Probability
0.15
Done
0.30
0.35
X
O
ch c
hen
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