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A ski jacket manufacturer has outsourced production to a supplier in Asia. The electronics manufacturer sells three types of jackets a high - end, a

A ski jacket manufacturer has outsourced production to a supplier in Asia. The electronics
manufacturer sells three types of jackets a high-end, a mid-range and a low-end jacket. For the
upcoming winter season, the demand forecast for the high-end jacket is normally distributed, with
a mean of 600 and a standard deviation of 400, the demand forecast for the mid-range jacket has a
mean of 1000 and a standard deviation of 500 and the demand forecast for the low-end jacket has
a mean of 2000 and a standard deviation of 600. The high-end jacket has a sale price of $300, a
production cost of $120 and a salvage value of $100. The mid-range jacket has a sale price of
$200, a production cost of $100 and a salvage value of $85. The low-end jacket has a sale price of
$110, a production cost of $70 and a salvage value of $50.
(i) How many jackets of each type should the manufacturer order, if there are no capacity
constraints?
(ii) The supplier has available production capacity of only 3600 jackets. What is the
expected profit if the manufacturer orders 600 high end jackets, 1000 mid-range jackets
and 2000 low end jackets?
(iii) How many jackets of each type should the manufacturer order if the available capacity
is 3600? What is the expected profit?

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