Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please provide the math/work: Flextrola, Inc., an electronics systems integrator, is planning to design a key component for its next-generation product with Solectrics. Flextrola will

please provide the math/work:

Flextrola, Inc., an electronics systems integrator, is planning to design a key component for its next-generation product with Solectrics. Flextrola will integrate the component with some software and then sell it to consumers. Given the short life cycles of such products and the long lead times quoted by Solectrics, Flextrola only has one opportunity to place an order with Solectrics prior to the beginning of its selling season. Flextrolas demand during the season is normally distributed with a mean of 1000 and a standard deviation of 600.

Solectrics production cost for the component is $52 per unit, and it plans to sell the component for $72 per unit to Flextrola. Flextrola incurs essentially no cost associated with the software integration and handling of each unit. Flextrola sells these units to consumers for $121 each. Flextrola can sell unsold inventory at the end of the season in a secondary electronics market for $50 each. The existing contract specifies that once Flextrola places the order, no changes are allowed to it. Also, Solectrics does not accept any returns of unsold inventory, so Flextrola must dispose of excess inventory in the secondary market.

a.

What is the probability that Flextrolas demand will be within 25 percent of its forecast?

b.

What is the probability that Flextrolas demand will be more than 40 percent greater than Flextrolas forecast?

c.

Under this contract, how many units should Flextrola order to maximize its expected profit?

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

Personal Finance

Authors: Jeff Madura

4th Edition

0136117007, 9780136117001

More Books

Students also viewed these Finance questions

Question

=+What do you wish you had known when you were starting out?

Answered: 1 week ago