First person who answered this got a. and b. right, but the rest were wrong. Ple
ID: 367844 • Letter: F
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First person who answered this got a. and b. right, but the rest were wrong. Please help!!!! (Link to wrong answers and table 13.4 at the bottom of page)
Link to Wrong Answers: https://www.chegg.com/homework-help/questions-and-answers/please-help-posted-days-ago-one-answered-table-134-bottom-page-question-q25214356
Use Table 13.4 Flextrola, Inc., an electronics systems integrator, is planning to design a key component for their next generation product with Solectrics. Flextrola will integrate the component with some software and then sell it to consumers. Given the short life cycles of such products and the long lead times quoted by Solectrics, Flextrola only has one opportunity to place an order with Solectrics prior to the beginning of its selling season. Flextrola's demand during the season is normally distributed with a mean of 1400 and a standard deviation of 600 Solectrics' production cost for the component is $51 per unit, and it plans to sell the component for $72 per unit to Flextrola. Flextrola incurs essentially no cost associated with the software integration and handling of each unit. Flextrola sells these units to consumers for $123 each. Flextrola can sell unsold inventory at the end of the season in a secondary electronics market for $54 each. The existing contract specifies that once Flextrola places the order, no changes are allowed to it. Also Solectrics does not accept any returns of unsold inventory, so Flextrola must dispose of excess inventory in the secondary market. If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit for a correct answer will depend on using the specified meth What is the probability that Flextrola's demand will be within 25% of its forecast? (Round your answer to 4 decimal places.) What is the probability that Flextrola's demand will be more than 40% greater than a- Use Excel 0.4404 0.1753 Flextrola's forecast? Use Excel (Round your answer to 4 decimal places.) Under this contract, how many units should Flextrola order to maximize its expected profit? Use Table 13.4 If Flextrola orders 1100 units, how many units of inventory can Flextrola's expect to sell in the secondary electronics market? Use Table 13.4 (Round your answer to 2 decimal places.) e. If Flextrola orders 1100 units, what is expected sales? (Round your answer to 2 decimal places.) f. If Flextrola orders 1100 units, what is expected profit?Explanation / Answer
NEWSVENDOR MODEL
Given
µ =1400
s=600
cost = $ 72
Price =$ 123
Salvage = $54
b.Under this contract, how many units should Flextrola order to maximize its expected profit? Use Table 13.4
Overage cost is the per-unit cost of over ordering
Underage cost is the per-unit opportunity cost of under ordering
Cost of Overage (Co) = cost - salvage = 72-54 = $ 18
Cost of Underage (Cu) = Price - cost = 123-72= $ 51
critical ratio=Cu/(Cu + Co) = 51/(18+51)= 0.7391
Lookup the z-statistic in the Standard Normal Distribution Function Table that corresponds to the critical ratio: f(z) = 0.7391
Z corresponding to probability F(z) =0.7391 is 0.6 (Exact Z match for F(0.7391) is not found in table .0.6 for 0.7257 is the closest value found on the table)
Order quantity, Q = u + (z*std dev)
= 1400+ 0.6* 600. =1760 units
d.If Flextrola orders 1100 units, how many units of inventory can Flextrola's expect to sell in the secondary electronics market?
Order quantity (inventory) , Q=1100 ,
Excess inventory that is left over beyond demand is sold in the secondary market
Expected left over inventory - average number of inventory units that exceed the demand
Expected Leftover Inventory = Q - Expected Sales
= 1100-981.32=118.68 units
*Expected Sales, see next question (e)
e. If Flextrola orders 1100 units, what is expected sales?
Expected lost sales :
Z=q-u/s = (1100-1400)/600= - 0.5
L(z) =L(-0.5)
From standard normal loss function table,
L(-0.5)= 0.6978
Expected lost sales= s * L(Z)=600* 0.6978=418.68 units
Expected sales:
Expected sales = u -Expected lost sales
=1400-418.68 = 981.32 units
f. If Flextrola orders 1100 units, what is expected profit?
Expected profit = (Price-Cost )*Expected sales - (Cost-Salvage value)* Expected left over inventory
= (123-72)*981.32-(72-54)*118.68 = $47911.08
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