******need an executive summery based on this question and the two excel spreads
ID: 466889 • Letter: #
Question
******need an executive summery based on this question and the two excel spreadsheets*******
ABC Company stocks and ships to their retailers a product (KB456) each week. The Product
KB456 costs $150 per unit and is sold to the retailers for $230 per unit. Units not sold during
one week are held over and sold the next week at a cost of $15 per unit, charged on beginning
inventory. The company also charges itself $12 per unit for any lost sales. The fixed cost for the
operations is $2,000 per week. The company wants to maximize profits.
The demand for product KB456 follows a uniform distribution with a minimum of 150 units and
a maximum of 200 units. The company is considering three possible order levels. These are
170, 175, or 180 units per week. Beginning inventory is zero.
Objective:
The board wants to know which of the 3 stock levels is the best one that maximizes profit.
Project #1
Project #1 - Format
Executive
Summary
Problem
Recommendation
Risk
Next Steps
Model
#1 – One Year
Model #2 – 30 (One Year) Summaries
Exhibits
Graphs
Statistical Summaries
Detail
Formulas
Project #1 – What If (Baseline)
What is Breakeven?
What if Demand is 10% lower?
What if Demand is 10% higher?
What is Optimal Range Order Point?
Which Order Point drives the least Lost Sales?
Which Order Point drives the least “Carryover” Inventory?
What if demand band narrowed by 10%?
What is the least profit with the current demand level?
Impact on profit if order level drops by 10%
What is your “Final” recommendation?
Explanation / Answer
i did not get what exactly the issue is
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