Answered step by step
Verified Expert Solution
Question
1 Approved Answer
To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof hunting boots. Unfortunately,
To ensure a full line of outdoor clothing and accessories, the marketing department at Teddy Bower insists that they also sell waterproof hunting boots. Unfortunately, neither Teddy Bower nor TeddySports has expertise in manufacturing those kinds of boots. Therefore, Teddy Bower contacted several Taiwanese suppliers to request quotes. Due to competition, Teddy Bower knows that it cannot sell these boots for more than $54. However, $40 per boot was the best quote from the suppliers. In addition, Teddy Bower anticipates excess inventory will need to be sold off at a 50 percent discount at the end of the season. Given the $54 price, Teddy Bower's demand forecast is for 520 boots, with a standard deviation of 420 . a. If Teddy Bower decides to include these boots in its assortment, how many boots should it order from its supplier? (Round your answer to nearest whole number.) Answer is complete but not entirely correct. b. Suppose Teddy Bower orders 500 boots. What would its expected profit be? (Round your answer to the nearest whole number.) c. John Briggs, a buyer in the procurement department, overheard at lunch a discussion of the "boot problem." He suggested that Teddy Bower ask for a quantity discount from the supplier. After following up on his suggestion, the supplier responded that Teddy Bower could get a 8 percent discount if they were willing to order at least 1,040 boots. If the objective is to maximize expected profit, how many boots should it order given this new offer? (Enter your answer as a whole number.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started