Firewire is a high-end manufacturer of surfboards. A surfboard is sourced at a cost of $80 and
Question:
Firewire is a high-end manufacturer of surfboards. A surfboard is sourced at a cost of $80 and sold for $125 to surf shops in its home market (United States). One order is placed at the beginning of the summer season. Currently, Firewire disposes any unsold boards to their outlet store affiliates for $70. It costs $10 to hold a board in inventory for the entire season and ship it to outlet affiliates. Demand for this item is forecasted to be normally distributed with a mean of 4,000 units and a standard deviation of 1750 units.
A) Please provide ideal service level and order quantity? Expected profits? Expected overstock to outlets?.... under your preferred policy.
B) If Firewire chooses instead of outlets to ship to Australia surf shops, the salvage value would increase to $75 per unit (board) including all associated costs (including the aforementioned holding costs).Would this be a better option?....please show each result as in part A for this alternative scenario to justify your conclusion?
International Business
ISBN: 9781292274157
8th Edition
Authors: Simon Collinson, Rajneesh Narula, Alan M. Rugman