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Flextrola, Inc., an electronic systems integrator, plans to design a key component for its next-generation product with Solectrics. Flextrola will integrate the component with some
Flextrola, Inc., an electronic systems integrator, plans to design a key component for its next-generation product with Solectrics. Flextrola will integrate the component with some software and then sell it to consumers. Given the short life cycles of such products and the long delivery times cited by Solectrics, Flextrola only has one opportunity to place an order with Solectrics before the start of its sales season. The demand for Flextrola during the season is normally distributed with a mean of 900 and a standard deviation of 700. Solectrics' production cost for the component is $52 per unit and it plans to sell the component for $70 per unit to Flextrola. Flextrola incurs virtually no costs associated with software integration and management of each unit. Flextrola sells these units to consumers for $124 each. Flextrola can sell unsold inventory at the end of the season on a secondary electronic marketplace for $46 each. The existing contract specifies that once Flextrola places the order, no changes to the order are permitted. Additionally, Solectrics does not accept returns of unsold inventory, so Flextrola must dispose of excess inventory on the secondary market. If part of the question specifies whether to use Table 13.4 or use Excel, then credit for a correct answer will depend of using the specified method.
A. What is the probability that Flextrola's demand is within 25% of its forecast?
B. What is the probability that demand for Flextrola is more than 40% greater than Flextrola's forecast?
C. According to this contract, how many units should Flextrola order to maximize its expected profit?
D. If Flextrola orders 1,200 units, how many units of inventory can Flextrola expect to sell in the secondary electronic market?
E. If Flextrola orders 1,200 units, what are the expected sales?
F. If Flextrola orders 1,200 units, what is the expected utility?
A. What is the probability that Flextrola's demand is within 25% of its forecast?
B. What is the probability that demand for Flextrola is more than 40% greater than Flextrola's forecast?
C. According to this contract, how many units should Flextrola order to maximize its expected profit?
D. If Flextrola orders 1,200 units, how many units of inventory can Flextrola expect to sell in the secondary electronic market?
E. If Flextrola orders 1,200 units, what are the expected sales?
F. If Flextrola orders 1,200 units, what is the expected utility?
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