Could someone please show the steps to create the spread sheet to complete this
ID: 3317840 • Letter: C
Question
Could someone please show the steps to create the spread sheet to complete this problem? I am having trouble, espcially creating the spread sheets. Please do not copy and paste from other problems. Thank you!
In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The Dougie that teaches children how to dance. The fixed cost to produce the doll is $100,000. The variable cost, which includes material, labor, and shipping costs, is $34 per doll. During the holiday selling season, FTC will sell the dolls for $42 each. If FTC overproduces the dolls, the excess dolls will be sold in January through a distributor who has agreed to pay FTC $10 per doll. Demand for new toys during the holiday selling season is extremely uncertain. Forecasts are for expected sales of 60,000 dolls with a standard deviation of 15,000. The normal probability distribution is assumed to be a good description of the demand. FTC has tentatively decided to produce 60,000 units (the same as average demand), but it wants to conduct an analysis regarding this production quantity before finalizing the decision.
Create a what-if spreadsheet model using a formula that relate the values of production quantity, demand, sales, revenue from sales, amount of surplus, revenue from sales of surplus, total cost, and net profit. What is the profit corresponding to average demand (60,000 units)?
$ __________
Modeling demand as a normal random variable with a mean of 60,000 and a standard deviation of 15,000, simulate the sales of the Dougie doll using a production quantity of 60,000 units. What is the estimate of the average profit associated with the production quantity of 60,000 dolls? Round your answer to the nearest dollar.
$ ____________
How does this compare to the profit corresponding to the average demand (as computed in part (a))?
Average profit is _______ the profit corresponding to average demand.
Before making a final decision on the production quantity, management wants an analysis of a more aggressive 70,000-unit production quantity and a more conservative 50,000-unit production quantity. Run your simulation with these two production quantities. What is the mean profit associated with each? Round your answers to the nearest dollar.
50,000-unit production quantity: $ __________
70,000-unit production quantity: $ ____________
Compare the three production quantities (50,000, 60,000, and 70,000) using all these factors. What trade-offs occur? Round your answers to 3 decimal places.
50,000 units: _______
60,000 units: _________
70,000 units: ________
Explanation / Answer
1. The fixed cost of production is 100,000
Variable cost is $34/doll
Case1 For holidays the cost is $42/doll
Case 2 Excess dolls cost in january $10/doll
Let,
Q be the quantity of production
D be the demand of dolls
R be the revenue
T be the total cost
P be the profit.
Surplous amount =Q-D
Revenue from the sales of surplous = 10(Q-D)
Revenue from sales=42D+10(Q-D)
Total cost =Fixed Cost + 34Q
Profit = Revenue from sales-Total cost
It is given that the demand follows a normal distribution which implies that if it is the holiday selling season then there will be a sale of maximum 60,000 dolls.
To calculate the profit corresponding to average demand (60,000 units)
Q=60,000,
D=60,000,
Revenue from sales=42D+10(Q-D)
= 42*60,000 = 2,520,000
Total cost =Fixed Cost + 34Q
= 100,000+34*60,000
= 2,140,000
Profit = 2,520,000 - 2,140,000=380,000
So, there will be a profit of $380,000.
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