Technic Limited is an established company that sells trending technological equipment. Their aim has always been to supply the Caribbean market with the latest Orange ephone on the same release date as its international competitors. For the past five years, they have done this. However, many phones were left in stock beyond the first month and could not be sold until a significant price reduction was initiated. This has caused the company to suffer loss. This year they are contemplating retailing the ephone15 on September 1st (the international release date) and would like to utilize past data to help make a decision on the quantity of ephones to purchase. Number of ephones sold 35 36 37 38 39 40 Table 1: Demand for ephones a. How many units should be ordered? Probability The ephone is priced to sell at $10,000 per unit and its cost is constant at $7,000 per unit. Each unit not sold within the first month has a salvage value of $5,000. Demand is as shown in Table 1. .10 0.15 .25 .25 .15 .10 b. How many units should be ordered? Similarly, Technic retails external hard drives. It has 165 units in stock and orders every 2 weeks when the distributor visits the facility. Demand for this item averages 20 units with a standard deviation of 4 units. Lead time for the product to arrive is one week. Management has a goal of 98% probability of not stocking out for this item. The salesperson should arrive within 2 days. (Assume 20 units will be sold each day until his arrival).
Technic Limited is an established company that sells trending technological equipment. Their aim has always been to supply the Caribbean market with the latest Orange ephone on the same release date as its international competitors. For the past five years, they have done this. However, many phones were left in stock beyond the first month and could not be sold until a significant price reduction was initiated. This has caused the company to suffer loss. This year they are contemplating retailing the ephone15 on September 1st (the international release date) and would like to utilize past data to help make a decision on the quantity of ephones to purchase. Number of ephones sold 35 36 37 38 39 40 Table 1: Demand for ephones a. How many units should be ordered? Probability The ephone is priced to sell at $10,000 per unit and its cost is constant at $7,000 per unit. Each unit not sold within the first month has a salvage value of $5,000. Demand is as shown in Table 1. .10 0.15 .25 .25 .15 .10 b. How many units should be ordered? Similarly, Technic retails external hard drives. It has 165 units in stock and orders every 2 weeks when the distributor visits the facility. Demand for this item averages 20 units with a standard deviation of 4 units. Lead time for the product to arrive is one week. Management has a goal of 98% probability of not stocking out for this item. The salesperson should arrive within 2 days. (Assume 20 units will be sold each day until his arrival).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Quantitative Methods II - Question 3. Please help.Thank you
Transcribed Image Text:Question 3
Technic Limited is an established company that sells trending technological
equipment. Their aim has always been to supply the Caribbean market with the
latest Orange ephone on the same release date as its international competitors.
For the past five years, they have done this. However, many phones were left in
stock beyond the first month and could not be sold until a significant price
reduction was initiated. This has caused the company to suffer loss. This year they
are contemplating retailing the ephone15 on September 1st (the international
release date) and would like to utilize past data to help make a decision on the
quantity of ephones to purchase.
Number of Probability
ephones sold
35
.10
TT
36
0.15
37
.25
38
.25
39
.15
.10
40
Table 1: Demand for ephones
The ephone is priced to sell at $10,000 per unit and its cost is constant at $7,000
per unit. Each unit not sold within the first month has a salvage value of $5,000.
Demand is as shown in Table 1.
a. How many units should be ordered?
Similarly, Technic retails external hard drives. It has 165 units in stock and orders
every 2 weeks when the distributor visits the facility. Demand for this item
averages 20 units with a standard deviation of 4 units. Lead time for the product
to arrive is one week. Management has a goal of 98% probability of not stocking
out for this item. The salesperson should arrive within 2 days. (Assume 20 units
will be sold each day until his arrival).
b. How many units should be ordered?
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