Answered step by step
Verified Expert Solution
Question
1 Approved Answer
9. (17 points) You must show detailed numerical analysis and quantitative formulas in an Excel Model (step-by-step) to get credit in this question. If you
9. (17 points) You must show detailed numerical analysis and quantitative formulas in an Excel Model (step-by-step) to get credit in this question. If you do not submit the associated analysis through a professionally concluded Excel template, you will get zero credit: Handi Inc., a cell phone manufacturer, procures a standard display from LCD Inc. via on options supply contract", At the start of quarter 1 (Q1) Handi pays LCD $15 per option. At that time Handi's forecast of demand in quarter 2 (02) is normally distributed with mean 10,000 and standard deviation 5,000. At the start of Q2 Handi learns exact demand for Q2 and then exercises options at the fee of $45 per option (for every exercised option LCD delivers one display to Handi). Assume Handi starts Q2 with no display inventory and displays owned at the end of Q2 are worthless. Should Handi's demand in Q2 be larger than the number of options held, Handi purchases additional displays on the spot market for $75 per unit. a. How many optimum options should Handi purchase from LCD, Inc. at the start of Q1 to minimize expected total procurement cost? Compute the Expected Total Procurement Cost at the optimum options b. What is the chance that there is a need to procure at the spot market with only 7500 options signed? C. Compute Expected Total Procurement Cost with 12,500 options and compare the result you obtained in part a. Provide a proper business interpretation for the associated comparison through a textbox in your Excel model. 9. (17 points) You must show detailed numerical analysis and quantitative formulas in an Excel Model (step-by-step) to get credit in this question. If you do not submit the associated analysis through a professionally concluded Excel template, you will get zero credit: Handi Inc., a cell phone manufacturer, procures a standard display from LCD Inc. via on options supply contract", At the start of quarter 1 (Q1) Handi pays LCD $15 per option. At that time Handi's forecast of demand in quarter 2 (02) is normally distributed with mean 10,000 and standard deviation 5,000. At the start of Q2 Handi learns exact demand for Q2 and then exercises options at the fee of $45 per option (for every exercised option LCD delivers one display to Handi). Assume Handi starts Q2 with no display inventory and displays owned at the end of Q2 are worthless. Should Handi's demand in Q2 be larger than the number of options held, Handi purchases additional displays on the spot market for $75 per unit. a. How many optimum options should Handi purchase from LCD, Inc. at the start of Q1 to minimize expected total procurement cost? Compute the Expected Total Procurement Cost at the optimum options b. What is the chance that there is a need to procure at the spot market with only 7500 options signed? C. Compute Expected Total Procurement Cost with 12,500 options and compare the result you obtained in part a. Provide a proper business interpretation for the associated comparison through a textbox in your Excel model
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started