Flextrola, Inc., an electronic systems integrator, is planning to design a key component for their next generation product with Solectrics. Flextrola will integrate the component with some software and then sell it to consumers. Given the short life cycles of such products and the long lead times quoted by Solectrics, Flextrola only has one opportunity to place an order with Solectrics prior to the beginning of its selling season. Fletrolas demand during the season is normally distributed with a mean of 1000 and a standard deviation of 600. Solectrics production cost for the component is $52 per unit, and it plans to sell the component for $72 per unit to Flextrola. Flextrola incurs essentially no cost associated with the software integration and handling of each unit. Flextrola sells these units to consumers for $121 each. Flextrola can sell unsold inventory at the end of the season in a secondary electronics market for $50 each. The existing contract specifies that once Flexitrola places the inventory, no changes are allowed. Also, Solectrics does not accept any returns of unsold inventory, so Flexitrola must dispose of excess inventory in the secondary market.

1. What is Flextrolas stockout probability, i.e., probability that the demand cannot be satisfied? 2. What is Flextrolas expected sales? 3. How many units of inventory can Flexitrola expect to sell in the secondary electronics market? 4. What is Flextrolas fill rate, i.e., the fraction of demand that is satisfied?

5. What is Flextrorlas expected gross margin percentage, i.e., (Revenue - Cost)/Revenue? Note Revenue includes both regular sales and salvage revenue.

6. For S = 1200, what is the distribution (i.e., histogram) of Flextrolas (seasonal) profit? What is Flextrolas expected profit V (S) and its 95% confidence interval (CI)?

7. What is Solectrics expected profit G(S)? 8. By the contract the menu of order quantities that Flextrola can order is S = 1000, 1100, . . . ,1500, 1600. Which order quantity can maximize the expected profit of Flextorla? [Hint: for each S = 1000, . . . , 1600, run simulation to find the profit V (S) and its CI. Then plot the curve V (S) and CI for each S and find the maximal S along with CI for each S. Use Data Table in Excel.] 9. Which order quantity can maximize Solectrics expected profit G(S) given the contractual menu of the order quantities? (All Has to be done on Excel)