Questions 16 to 20 are based on the following information: Aventis is a major ma
ID: 382431 • Letter: Q
Question
Questions 16 to 20 are based on the following information: Aventis is a major manu- facturer of the flu (influenza) vaccine in the U.S. Aventis manufactures the vaccine before the fi season at a cost of $10 per dose (a "dose" is vaccine for one person). During the flu season Aventis sells doses to distributors and to health-care providers for $24. However, sometimes the Blu is mild and not all doses are sold if a dose is not sold during the season then it is must be thrown out. For next year flu season, the demand distribution (in millions of doses) for flu doses is as follows: worthless and Demand Probability Probability Cumulative Dema Cumulative nd Probability Probability 10 20 30 40 50 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.3 0.4 0.5 60 70 80 90 100 0.1 0.1 0.1 0.1 0.1 0.6 0.7 0.8 0.9Explanation / Answer
Q16. D. 0.4
Probability of stocking out = Probability that demand will be greater than 65 m doses, P(D>65) = P(D=70) + P(D=80) + P(D=90) + P(D=100) = 0.1+0.1+0.1+0.1 = 0.4
Q17. B. Cu = 14, Co = 10
Understocking cost = marginal profit = selling price - cost = 24-10 = 14
Overstocking cost = marginal loss = cost - salvage value = 10 - 0 = 10
Q18. C. 60
Critical ratio (target stock-in) = Cu/(Cu+Co) = 14/(14+10) = 0.58
Look for probability greater than 0.58 in the below cumulative probability table. Corresponding demand value is 60. Therefore optimal number of doses to manufacture = 60 m doses.
Q19. D. 80
Co = 10 - 5 = 5
target stock-in probability = Cu/(Cu+Co) = 14/(14+5) = 0.74
Corresponding order value = 80
Q20. D. $ 8 per dose
Cu/(Cu+Co) = 1 - 0.1
or 14/(14+10-p) = 0.9
p = 8.44 ~ 8
Demand (milions) Probability Cumulative Probability 10 0.10 0.10 20 0.10 0.20 30 0.10 0.30 40 0.10 0.40 50 0.10 0.50 60 0.10 0.60 70 0.10 0.70 80 0.10 0.80 90 0.10 0.90 100 0.10 1.00Related Questions
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