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4. (30 points) To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof
4. (30 points) To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof hunting boots. Unfortunately, neither Teddy Bower nor Teddy Sports has expertise in manufacturing those kinds of boots. Therefore, Teddy Bower contacted several Taiwanese suppliers to request quotes. Due to competition, Teddy Bower knows that it cannot sell these boots for more than $120. However, $60 per boot was the best quote from the suppliers. In addition, Teddy Bower anticipates excess inventory will need to be sold off at a 60% discount at the end of the season. Given the $120 price, Teddy Bower's demand forecast is 1500 for boots, with a standard deviation of 300. a. If Teddy Bower decides to include these boots in its assortment, how many boots should it order from its suppliers? What would be the stock-out probability and expected profit if Teddy Bower orders the quantity you suggest? b. If Teddy Bower wishes to unsure a 98 percent in-stock probability, how many boots should it order from its suppliers? C. Suppose Teddy Bower orders 1600 boots. What would its expected profit be? ne procurement department, overheard at a lunch a discussion of the "boot problem". He suggested that Teddy Bower ask for a quantity discount from the supplier. After following up on his suggestion, the supplier responded that Teddy Bower could get a 5% discount if they were willing to order at least 2000 boots. If the objective is to maximize expected profit, how many boots should it order given this new offer? 4. (30 points) To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof hunting boots. Unfortunately, neither Teddy Bower nor Teddy Sports has expertise in manufacturing those kinds of boots. Therefore, Teddy Bower contacted several Taiwanese suppliers to request quotes. Due to competition, Teddy Bower knows that it cannot sell these boots for more than $120. However, $60 per boot was the best quote from the suppliers. In addition, Teddy Bower anticipates excess inventory will need to be sold off at a 60% discount at the end of the season. Given the $120 price, Teddy Bower's demand forecast is 1500 for boots, with a standard deviation of 300. a. If Teddy Bower decides to include these boots in its assortment, how many boots should it order from its suppliers? What would be the stock-out probability and expected profit if Teddy Bower orders the quantity you suggest? b. If Teddy Bower wishes to unsure a 98 percent in-stock probability, how many boots should it order from its suppliers? C. Suppose Teddy Bower orders 1600 boots. What would its expected profit be? ne procurement department, overheard at a lunch a discussion of the "boot problem". He suggested that Teddy Bower ask for a quantity discount from the supplier. After following up on his suggestion, the supplier responded that Teddy Bower could get a 5% discount if they were willing to order at least 2000 boots. If the objective is to maximize expected profit, how many boots should it order given this new offer
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