D-Solar is a retailer of solar panels. The demand in Canada in the previous year was...
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D-Solar is a retailer of solar panels. The demand in Canada in the previous year was 100,000 panels. There are two suppliers that can provide one of the required products. One of the suppliers is domestic and the other one is located in China. The capacity of the domestic supplier is between 30,000 to 110,000. The purchasing cost for the domestic supplier is $9. The capacity of the Chinese supplier is between 70,000 to 130,000. The purchasing cost from the Chinese supplier is uncertain due to variations in exchange rates. With the probability of 0.7 the price is $8, and with the probability of 0.3 the price is $14. The demand in the next year is uncertain. With the probability of 0.4 the demand will stay the same. With the probability of 0.5 it will increase by 20%, and with the probability of 0.1 it will increase by 40%. D-Solar wants to decide about the next year sourcing strategy. The company can use either the Chinese supplier or the domestic supplier. The selling price is $15. Which supplier should D-Solar pick? If the demand is more than the capacity, the company will lose the additional demand. D-Solar is a retailer of solar panels. The demand in Canada in the previous year was 100,000 panels. There are two suppliers that can provide one of the required products. One of the suppliers is domestic and the other one is located in China. The capacity of the domestic supplier is between 30,000 to 110,000. The purchasing cost for the domestic supplier is $9. The capacity of the Chinese supplier is between 70,000 to 130,000. The purchasing cost from the Chinese supplier is uncertain due to variations in exchange rates. With the probability of 0.7 the price is $8, and with the probability of 0.3 the price is $14. The demand in the next year is uncertain. With the probability of 0.4 the demand will stay the same. With the probability of 0.5 it will increase by 20%, and with the probability of 0.1 it will increase by 40%. D-Solar wants to decide about the next year sourcing strategy. The company can use either the Chinese supplier or the domestic supplier. The selling price is $15. Which supplier should D-Solar pick? If the demand is more than the capacity, the company will lose the additional demand.
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To determine the best supplier for DSolar we need to calculate the expected cost and revenue for each supplier based on the given probability distribu... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I
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