1. You are the procurement manager of Tacy's. The supplier offers a new style of classical bomber jacket for the winter season. The purchase cost is $200, and the selling price is $500. You consider offering a discount for unsold jackets at the end of the season. The discounted price is $150. The forecasted demand, D, is normally distributed with a mean of 3,000 units () and a standard deviation of 700 units (). Assume that the A/F ration is 1.

A. What is the expected profit maximizing order quantity, Q?

B. At Q=4,500, what is the expected fill rate?

C. At Q=4,500, what is the stock-out probability?

D, Assume that you have access to the historical data. You estimate that the mean A/F ratio is 1.2 with a standard deviation of 0.6. Estimate the expected demand () and standard deviation of demand () (Hint: the initial forecast remains at 3,000 units).