Please help me figure out how to get the answers in red, thank you!
You are making the sourcing decisions for a fashion company and it turns out that there are two options for manufacturing your "Punk Rock Operations" T-shirts. You sell the T-shirts for $15 each during the two months of December and January night after you get the results of BUAD-311. Given that the grading of 311 is so unpredictable, the demand of these T-shirts is also unpredictable, with the mean over the two months being 500 and the standard deviation being 150. Any leftover shirts are donated to charity. The first option is to outsource the production in China, in which case the procurement cost of each T-shirt is $5, the shipping cost is $200 (regardless of the size of the order) and it takes 2 months for the order to be delivered. Alternatively, you can produce in Los Angeles where the procurement cost goes up to $10 but the lead time is just one day. The fixed printing cost for the LA shop is $30. The financing cost for each T-shirt is $2 per T-shirt per year For reference, here is a sample of potentially useful standard normal Z-table values: Z value: 0.0 0.433 0.675 0.84 1.04 1.28 1.65 2.05 Probability: 50% 66.7% 75% 80% 85% 90% 95% 98% a. Assuming that students that do not receive a shirt are forgiving and quickly move on, what is your optimal order quantity if you decide to outsource to China? 565 T-shirts. b. What is your total cost if you decide to outsource? $3,130 What is the probability of stocking out if you decide to outsource? 33.3% d. What is your optimal order quantity if you decide to manufacture in Los Angeles? 300 shirts e. What is your Reorder Point if you decide to manufacture in Los Angeles if you want to achieve the same stock-out probability as the outsourcing option? 16.7183 1 What is your total cost if you decide to manufacture in Los Angeles? $5,102.79 You are making the sourcing decisions for a fashion company and it turns out that there are two options for manufacturing your "Punk Rock Operations" T-shirts. You sell the T-shirts for $15 each during the two months of December and January night after you get the results of BUAD-311. Given that the grading of 311 is so unpredictable, the demand of these T-shirts is also unpredictable, with the mean over the two months being 500 and the standard deviation being 150. Any leftover shirts are donated to charity. The first option is to outsource the production in China, in which case the procurement cost of each T-shirt is $5, the shipping cost is $200 (regardless of the size of the order) and it takes 2 months for the order to be delivered. Alternatively, you can produce in Los Angeles where the procurement cost goes up to $10 but the lead time is just one day. The fixed printing cost for the LA shop is $30. The financing cost for each T-shirt is $2 per T-shirt per year For reference, here is a sample of potentially useful standard normal Z-table values: Z value: 0.0 0.433 0.675 0.84 1.04 1.28 1.65 2.05 Probability: 50% 66.7% 75% 80% 85% 90% 95% 98% a. Assuming that students that do not receive a shirt are forgiving and quickly move on, what is your optimal order quantity if you decide to outsource to China? 565 T-shirts. b. What is your total cost if you decide to outsource? $3,130 What is the probability of stocking out if you decide to outsource? 33.3% d. What is your optimal order quantity if you decide to manufacture in Los Angeles? 300 shirts e. What is your Reorder Point if you decide to manufacture in Los Angeles if you want to achieve the same stock-out probability as the outsourcing option? 16.7183 1 What is your total cost if you decide to manufacture in Los Angeles? $5,102.79
