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Information for questions 9-14. A manufacturer of lawn care equipment has introduced a new product. The anticipated demand is normally distributed with a mean
Information for questions 9-14. A manufacturer of lawn care equipment has introduced a new product. The anticipated demand is normally distributed with a mean of = 100 and a standard deviation of = 50. Each unit costs $75 to manufacture and the introductory price is to be $125 to achieve this level of sales. Any unsold units at the end of the season are unlikely to be very valuable and will be disposed of in a fire sale for $25 each. It costs $10 to hold a unit in inventory for the entire season. I run the excel spreadsheet for newsvendor model for you and I purposely remove the entries that you need to calculate yourself. Mean demand. - Standard Deviation of Demand, s- Cost per unit, c- Retail price, p Salvage Value, s = Cost of overstocking per unit, Co- Cart of undertaking nor unit C = 100 50 $75 $125 $15 $?? $22
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