Exercise 2
Single Period Model
Demand
|
8,000
|
10,000
|
12,000
|
14,000
|
16,000
|
18,000
|
Probability
|
11%
|
11%
|
28%
|
22%
|
18%
|
10%
|
- Fixed production cost: $100,000
- Variable production cost per unit: $80.
- During the summer season, selling price: $125 per unit.
- Salvage value: Any swimsuit not sold during the summer season is sold to a discount store for $20.
The company should produce 10,000 units or 12,000 units?
Exercise 3
Demand for the Child Cycle at Best Buy is 500 units per month. Best Buy incurs a fixed order placement, transportation, and receiving cost of Rs. 4,000 each time an order is placed. Each cycle costs Rs. 500 and the retailer has a holding cost of 20 percent. Evaluate the number of computers that the store manager should order in each replenishment lot? 693
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