Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Hillmart is an international retail store. Hillmart's managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system
Hillmart is an international retail store. Hillmart's managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system costs Hillmart $2,000,000 per month and $55 per order. Hillmart has two options, a partially automated B2B and a fully automated B2B system. The partially automated B2B system will have a fixed cost of $10,000,000 per month and a variable cost of $40 per order. The fully automated B2B system has a fixed cost of $22,000,000 per month and a variable cost of $25 per order. Based on data from the past 2 years, Hillmart has determined the following distribution on monthly orders: (Click the icon to view the data.) Read the requirements. Requirements 1 & 2. Prepare a table showing the cost of each plan for each quantity of monthly orders. What is the expected cost of each plan? Determine the monthly cost of each order level under the current plan and then compute the expected cost. Current plan Total monthly cost Total expected Order level of orders x Probability = cost of orders 250,000 orders x = 450,000 orders x 650,000 orders Total expected cost of plan Data table Monthly Number of Orders Probability 250,000 orders 0.15 450,000 orders 0.25 650,000 orders 0.35 - 1. Prepare a table showing the cost of each plan for each quantity of monthly orders. 2. What is the expected cost of each plan? 3. In addition to the information systems costs, what other factors should Hillmart consider before deciding to implement a new B2B system?
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