Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Green Thumb, a manufacturer of lawn care equipment, has introduced a new model of lawnmower. Each unit costs $250 to manufacture, and the introductory price

Green Thumb, a manufacturer of lawn care equipment, has introduced a new model of lawnmower. Each unit costs $250 to manufacture, and the introductory price is $450. At this price, the anticipated demand is normally distributed, with a mean of = 5000 and a standard deviation of = 3000. Any unsold units at the end of the season will be disposed of in a post-season sale for $200 each. a. How many units should Green Thumb manufacture for sale? b. What is the expected cost of this policy? c. How many customers does Green Thumb expect to turn away because of stocking out? Newsvendor Formulas CR = Cu / [Cu + Co] Q = NORMINV(CR, , ) Z = (Q - )/ Expected Lost Sales, or Expected Understock (ELS): ELS = X Loss(Z) To find Loss(Z), you can use the Standard Normal Loss table, or In Excel: Loss(Z) = NORMDIST(Z,0,1,0) - Z*(1-NORMSDIST(Z)) Expected Sales (ES): ES = - ELS Expected Leftover Inventory, or Expected Overstock (ELI): ELI = Q - ES Expected Cost (EC): EC = Cu X ELS + Co X ELI

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

Strategic Management and Competitive Advantage Concepts and Cases

Authors: Jay B. Barney, William Hesterly

5th edition

133129306, 0133127400, 9780133129304, 978-0133127409

More Books

Students also viewed these General Management questions