Question
Benetton has entered a contract with a retailer for a seasonal product. The retailer's sales price is $50 per unit of product. Benetton's sales price
Benetton has entered a contract with a retailer for a seasonal product. The retailer's sales price is $50 per unit of product. Benetton's sales price to the retailers is $40 per unit. Any unsold units can be sold by the retailer to a third party at a salvage value of $34 per unit. The retailer forecasts demand to be normally distributed, with a mean of 9000 and a standard deviation of 1000 units. The retailer has ordered 9320 units. The expected lost sales ( under-stock) for this order is 260 units. Benetton's production cost is $17 per unit. Hint: You do not need to use any formula to compute the expected under-stock. It has already been computed and provided to you.
1. Compute the expected number of units sold by the retailer.
A: 8132 units. B: 5060 units. C: 8511 units. D: 7356 units. E: 8740 units.
2. Compute the expected fill rate.
A: 95.7%. B: 92%. C: 94.6%. D: 97.1%. E: 89.7%.
3. Compute the expected over-stock ( leftover).
A: 908 units. B: 1300 units. C: 1759 units. D: 580 units. E: 1596 units.
4. Compute the expected profit for the retailer.
A: $83920. B: $105840. C: $262989. D: $198372. E: $127418.
5. Compute the expected profit for Benetton.
A: $167140. B: $102640. C: $214360. D: $164968. E: $162384.
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