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Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next
Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $7 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $2 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost-the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 325,000 and a standard deviation of 150,000. Use Table 13.4 If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit for a correct answer will depend on using the specified method. How many kilograms should Montanso place in the warehouse before the growing season? Use Table 13.4 and round-up rule. a. If Montanso put 450000 kgs in the warehouse, what is its expected b. revenue (include both domestic revenue and overseas revenue)? Use Table 13.4 and round-up rule. How many kilograms should Montanso place in the warehouse to c. minimize inventory while ensuring that the stockout probability is no greater than 10%? Use Table 13.4 and round-up rule. d. What is maximum profit for this seed
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