After graduating from UP, Hayato and Isley decide to start a medical company. Their company produces...

  

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After graduating from UP, "Hayato and Isley" decide to start a medical company. Their company produces flu shots every year. 10 years after they start their business, they become very successful and open warehouses in the following locations. Note that demand at each location is assumed to be Normal and independent of the demand at other locations. The mean and standard deviation of demand at each location is given in the following table: New York Germany India 200,000 Location: Portland 300,000 1,000,000 Standard Deviation 100,000 300,000 70,000 250,000 300,000 Because they produce flu shots, it is safe to assume that the problem is single period. Next, for each flu shot, unit production cost is $9 and the selling price is $19 (the selling price and production cost is the same over all the warehouses). Mean: China 800,000 1,000,000 Part A) What is the sum of optimal order quantities over all the warehouses; meaning find the optimal order quantity at each warehouse, and then add them together. (3 points) Part B) What is the sum of expected profits over all the warehouses? (3 points) Part C) Tae and Kevin do a little market research and come up with the following suggestion for Hayato and Isley: "Consolidate all the warehouses in the US in one warehouse in Memphis. Moreover, consolidate all the ware houses outside the US in one warehouse in the Middle East". What is the sum of optimal order quantities over the two new warehouses? (3 points) Part D) If the suggestion in part C requires an investment of $1,000,000, is it worth accepting it? Why? (3 pints) Part E) Daylin and Sam, come up with a different suggestion. They suggest to consolidate all the warehouses in one location in Netherlands. If this suggestion requires an investment of $3,000,000, is it worth accepting it? (3 points) Part F) Which suggestion should Tae and Isley opt for? The one in part C or the one in part E? why? (2 points) After graduating from UP, "Hayato and Isley" decide to start a medical company. Their company produces flu shots every year. 10 years after they start their business, they become very successful and open warehouses in the following locations. Note that demand at each location is assumed to be Normal and independent of the demand at other locations. The mean and standard deviation of demand at each location is given in the following table: New York Germany India 200,000 Location: Portland 300,000 1,000,000 Standard Deviation 100,000 300,000 70,000 250,000 300,000 Because they produce flu shots, it is safe to assume that the problem is single period. Next, for each flu shot, unit production cost is $9 and the selling price is $19 (the selling price and production cost is the same over all the warehouses). Mean: China 800,000 1,000,000 Part A) What is the sum of optimal order quantities over all the warehouses; meaning find the optimal order quantity at each warehouse, and then add them together. (3 points) Part B) What is the sum of expected profits over all the warehouses? (3 points) Part C) Tae and Kevin do a little market research and come up with the following suggestion for Hayato and Isley: "Consolidate all the warehouses in the US in one warehouse in Memphis. Moreover, consolidate all the ware houses outside the US in one warehouse in the Middle East". What is the sum of optimal order quantities over the two new warehouses? (3 points) Part D) If the suggestion in part C requires an investment of $1,000,000, is it worth accepting it? Why? (3 pints) Part E) Daylin and Sam, come up with a different suggestion. They suggest to consolidate all the warehouses in one location in Netherlands. If this suggestion requires an investment of $3,000,000, is it worth accepting it? (3 points) Part F) Which suggestion should Tae and Isley opt for? The one in part C or the one in part E? why? (2 points)

Answer rating: 100% (QA)

Part A Opt imal Order Quantity at Portland O Q 300 000 3 100 000 19 9 375 000 units Opt imal Order Quantity at New York O Q 1 000 000 3 300 000 19 9 1 ... View the full answer