(Flextrola) Flextrola, Inc., an electronics system integrator, is developing a new product.

As mentioned in Q 1 1 .4, Solectrics can produce a key component for this product. Solectrics sells this component to Flextrola for $72 per unit and Flextrola must submit its order well in advance of the selling season. Flextrola's demand forecast is a nonnal distribution with mean of 1 ,000 and standard deviation of600. Flextrola sells each unit, after integrating some software, for $ 1 21. Leftover units at the end of the season are sold for $50.

Xandova Electronics (XE for short) approached Flextrola with the possibility of also supplying Flextrola with this component. XE's main value proposition is that they offer 1 00 percent fill rate and one-day delivery on all ofFlextrola's orders, no matter when the orders are submitted. Flextrola promises its customers a one-week lead time, so the oneday lead time from XE would allow Flextrola to operate with make-to-order production.

(The software integration that Flextrola performs can be done within one day.) XE's price is $83.50 per unit.