Question 5 to be precise

Case Study - Specialty Toys Specialty Toys, Inc., sells a variety of rew and innovative children's toys. Management learned that the predicay season is the best time to introduce a new towy, because many families we this time to look for new ideas for December holiday gifts. WhenSpecialty discovers a new toy with good market potential, it chooses an October marketertry date. In order to get toys inits stres by October, Specialty places are-tire orders with its manufacturers in Jure July of each year. Demard for childer's toys can be highly volatile. If a new toy catcheson, a sense of shortage in the marketplace often increases the demard to high levels and large profits can be realized However, rew toys can also flop leaving Specialty shock with high levels of inventory that must be sold at reduced prices. The most important question the company faces is deciding how may wits of a new key should be purchased to meet articipated sales demarci If too few are purchased, sales will be kst, if too many ae purchased, profits will be redired because of low prices realized in clearance sales. For the coming season, Specialty plans toirtodire a new product called Weather Tediy. This variationof a talking techly bear is made by a company in Taiwan Whena child presses Teddy's hand, the bear begins to talk. A built-in barometer selectsore of five responses that predict the weather conditions. The responses range from "It looks to be a very nice day! Have fun""I thirk it may rain today. Don't forget your umbrella." Tests with the product show that, even though it is not a perfect weather predictx, its predictions are surprisingly good. Several of Specialty's managers chimed Tediy gave predictions of the weather that were as good as many kcal television weather forecasters, As with other proxirts, Specialty faces the decisionof how many Weather Teddy urits to order for the coming holiday season Members of the management team suggested order quantities of 15,000, 18,000, 24,000,cx 28,000 units. The wide range of ader quartities suggested indicates considerable disagreement concerning the market potential. The product management team asks you for an analysis of the stockout probabilities for various order quartities, an estimate of the profit potential, and to help make an order quantity recommendation Specialty expects to sell Weather Teckily for $24 basedona cost of $16 per unit. If invertory remains after the holiday season, Specialty will sell all surplus invertay for $5 per unit. After reviewing the sales history of similar prochets, Specialty's serio sales forecaster predicted anexpected demand of 20,000 units with a 95 probability that demand would be between 10,000 units and 30,000 units. Managerial Report Prepare a maragerial eport that airesses the following issues and recommends an ander quartity for the Weather Tedkly product. 1 (10 points). Use the sakes forecaster's predictim o describe a romal probability distribution that can be used to approximate the demand distribution Skeththe distribution and show its mean and starcard deviation 2 (20 points). Compute the probability of a stock out for the order quantities suggested by members of the management team disagreement concerning the market potential. The product management teamaks you for an analysis the stock out probabilities for various order qurtities, an estimate of the profit potential, and to help make an order quantity recommendation Specialty expects to sell Weather Teckly for $24 besedonaco of $16 per unit. If invertory remains after the holiday season, Specialty will sell all surplus invertory fo $5 per urit. After reviewing the sales history of similar products, Specialty's serios sales forecaster predicted anexpected demand of 20,000 units with a 95 probability that demand would be between 10,000 units and 30,000 units. Managerial Report Prepare a managerial seport that addresses the following issues and recommends an ander quartity for th Weather Tedly product. 1 (10 points). Uke the saks forecaster's predictim to describe a romal probability distribution that can be used to approximate the demand distribution Sketch the distributionard shovits meanandstandard deviation. 2 (20 points). Compute the probability of a stock-out for the ander quantities suggested by members of the management team 3 (20 points). Compute the projected profit for the cxder quartities suggested by the management team under three scenarios: worst case in which sales = 10,000 uits, most likely case in which sales = 20,000 urit, ardbestcase in whichsales = 30,000 units. 4 (30 points). One of Specisky's managers felt that the profit potential was so great that the ader quarti should have a 70% chance of meeting demand and only a 30% chance of any stock cuts. What quartity waddle andered under this policy, and what is the projected profit under the three sales scenarios 5 (20 points). Provide your own recormerdation for an order quantity and rote the associated profit projections. Prowide a rationale for your recommendation. Case Study - Specialty Toys Specialty Toys, Inc., sells a variety of rew and innovative children's toys. Management learned that the predicay season is the best time to introduce a new towy, because many families we this time to look for new ideas for December holiday gifts. WhenSpecialty discovers a new toy with good market potential, it chooses an October marketertry date. In order to get toys inits stres by October, Specialty places are-tire orders with its manufacturers in Jure July of each year. Demard for childer's toys can be highly volatile. If a new toy catcheson, a sense of shortage in the marketplace often increases the demard to high levels and large profits can be realized However, rew toys can also flop leaving Specialty shock with high levels of inventory that must be sold at reduced prices. The most important question the company faces is deciding how may wits of a new key should be purchased to meet articipated sales demarci If too few are purchased, sales will be kst, if too many ae purchased, profits will be redired because of low prices realized in clearance sales. For the coming season, Specialty plans toirtodire a new product called Weather Tediy. This variationof a talking techly bear is made by a company in Taiwan Whena child presses Teddy's hand, the bear begins to talk. A built-in barometer selectsore of five responses that predict the weather conditions. The responses range from "It looks to be a very nice day! Have fun""I thirk it may rain today. Don't forget your umbrella." Tests with the product show that, even though it is not a perfect weather predictx, its predictions are surprisingly good. Several of Specialty's managers chimed Tediy gave predictions of the weather that were as good as many kcal television weather forecasters, As with other proxirts, Specialty faces the decisionof how many Weather Teddy urits to order for the coming holiday season Members of the management team suggested order quantities of 15,000, 18,000, 24,000,cx 28,000 units. The wide range of ader quartities suggested indicates considerable disagreement concerning the market potential. The product management team asks you for an analysis of the stockout probabilities for various order quartities, an estimate of the profit potential, and to help make an order quantity recommendation Specialty expects to sell Weather Teckily for $24 basedona cost of $16 per unit. If invertory remains after the holiday season, Specialty will sell all surplus invertay for $5 per unit. After reviewing the sales history of similar prochets, Specialty's serio sales forecaster predicted anexpected demand of 20,000 units with a 95 probability that demand would be between 10,000 units and 30,000 units. Managerial Report Prepare a maragerial eport that airesses the following issues and recommends an ander quartity for the Weather Tedkly product. 1 (10 points). Use the sakes forecaster's predictim o describe a romal probability distribution that can be used to approximate the demand distribution Skeththe distribution and show its mean and starcard deviation 2 (20 points). Compute the probability of a stock out for the order quantities suggested by members of the management team disagreement concerning the market potential. The product management teamaks you for an analysis the stock out probabilities for various order qurtities, an estimate of the profit potential, and to help make an order quantity recommendation Specialty expects to sell Weather Teckly for $24 besedonaco of $16 per unit. If invertory remains after the holiday season, Specialty will sell all surplus invertory fo $5 per urit. After reviewing the sales history of similar products, Specialty's serios sales forecaster predicted anexpected demand of 20,000 units with a 95 probability that demand would be between 10,000 units and 30,000 units. Managerial Report Prepare a managerial seport that addresses the following issues and recommends an ander quartity for th Weather Tedly product. 1 (10 points). Uke the saks forecaster's predictim to describe a romal probability distribution that can be used to approximate the demand distribution Sketch the distributionard shovits meanandstandard deviation. 2 (20 points). Compute the probability of a stock-out for the ander quantities suggested by members of the management team 3 (20 points). Compute the projected profit for the cxder quartities suggested by the management team under three scenarios: worst case in which sales = 10,000 uits, most likely case in which sales = 20,000 urit, ardbestcase in whichsales = 30,000 units. 4 (30 points). One of Specisky's managers felt that the profit potential was so great that the ader quarti should have a 70% chance of meeting demand and only a 30% chance of any stock cuts. What quartity waddle andered under this policy, and what is the projected profit under the three sales scenarios 5 (20 points). Provide your own recormerdation for an order quantity and rote the associated profit projections. Prowide a rationale for your recommendation