Use Table 13.4 Fashionables is a franchisee of The UnLimited, the well-known ret
ID: 375407 • Letter: U
Question
Use Table 13.4 Fashionables is a franchisee of The UnLimited, the well-known retailer of fashionable clothing. Prior to the winter season, The UnLimited offers Fashionables the choice of five different colors of a particular sweater design. The sweaters are knit overseas by hand, and because of the lead times involved, Fashionables will need to order its assortment in advance of the selling season. As per the contracting terms offered by The UnLimited, Fashionables will also not be able to cancel, modify or reorder sweaters during the selling season. Demand for each color during the season is normally distributed with a mean of 600 and a standard deviation of 200. Further, you may assume that the demand for each sweater is independent of the demand for any other color The UnLimited offers the sweaters to Fashionables at the wholesale price of $44 per sweater, and Fashionables plans to sell each sweater at the retail price of $67 per unit. The UnLimited does not accept any returns of unsold inventory. However, Fashionables can sell all of the unsold sweaters at the end of the season at the fire-sale price of $15 each. 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 method. How many units of each sweater-type should Fashionables order to maximize its a. expected profit? Use Table 13.4 and round to nearest integer. If Fashionables wishes to ensure a 97.5% in-stock probability, what should its integer. Say Fashionables orders 750 of each sweater. What is Fashionables' expected b. order quantity be for each type of sweater? Use Table 13.4 and round to nearest profit? Use Table 13.4. Say Fashionables orders 750 of each sweater. What is the stockout probability for d. each sweater? Use Excel. Round your answer to 4 decimal places.)Explanation / Answer
m mean 600 s Std Dev 200 C Cost 44 P Price 67 V Salvage 15 April to july Formula used Cu Cost of under order 23 (P-C) Co Cost of over order 29 (C-V) CR Critical ratio 0.44 (Cu/(Cu+Co) So actual order m+Z*s 571 NORMINV(CR,m,s) Ans A If Order is 750 So x value 750 Probability filling 0.7734 Probability mismatch 0.2266 Ans D DS So direct sales 570.9758 FS And fire sale 179.0242 So profit direct sale 13132.44 DS*(P-C) So profit fire sale -5192 FS*(V-C) Total profit 7940.7422 Ans C SL Service level 0.975 (Cu/(Cu+Co) So actual order m+Z*s 992 NORMINV(SL,m,s) Ans B
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