Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Firewire is a high-end manufacturer of surfboards. A surfboard is sourced at a cost of $80 and sold for $125 to surf shops in its

Firewire is a high-end manufacturer of surfboards. A surfboard is sourced at a cost of $80 and sold for $125 to surf shops in its home market (United States). One order is placed at the beginning of the summer season. Currently, Firewire disposes any unsold boards to their outlet store affiliates for $70. It costs $10 to hold a board in inventory for the entire season and ship it to outlet affiliates. Demand for this item is forecasted to be normally distributed with a mean of 4,000 units and a standard deviation of 1750 units.

A) Please provide ideal service level and order quantity? Expected profits? Expected overstock to outlets?.... under your preferred policy.

B) If Firewire chooses instead of outlets to ship to Australia surf shops, the salvage value would increase to $75 per unit (board) including all associated costs (including the aforementioned holding costs).Would this be a better option?....please show each result as in part A for this alternative scenario to justify your conclusion?


 

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Business

Authors: Simon Collinson, Rajneesh Narula, Alan M. Rugman

8th Edition

1292274158, 9781292274157

More Books

Students also viewed these General Management questions

Question

What are the five forces that shape coca cola industry?

Answered: 1 week ago