Sarah wants to create a special holiday-themed soap. These soaps have an overall production cost of 10$
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Sarah wants to create a special holiday-themed soap. These soaps have an overall production cost of 10$ and will be sold for 15$ each. She forecasts a seasonal demand of 15000 units; however, it is unlikely that demand will be equal to the forecast. Any soap that is left over from the season will have to be sold at a 50% discount. She therefore decides to use the A/F method to build a demand model based on historic forecast/demand pairs from other holidays (see soap.xls). Given this data set, how many soaps should be produced in order to maximize expected profits (i.e., calculate the optimal order quantity).
Related Book For
Operations Management
ISBN: 978-0071091428
4th Canadian edition
Authors: William J Stevenson, Mehran Hojati
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