Question: Flextrola, Inc., an electronics systems integrator, is planning to design a key component for its next-generation product with Solectrics. Flextrola will integrate the component with
Flextrola. Ine, an electronics systems integrator, is planning to design a key component for its nextgeneration product with Solectrics. Fextrola will integrate the component with some software and then sell it to consumers. Given the short life cyeles of such products and the long lead times quoted by Solectrics. Fextrola only has one opportunity to place an order with Solectries prior to the beginning of its selling season. Flextrola's demand during the season is normally distribuled 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. Fiextrola can sell unsold imventory at the end of the season in a secondary electronics market for $50 each. The existing contract specifies that once Flextrole places the order, no changes are allowed to it. Also, Solectrics does not accept any returns of unsold iaventory, so Flextrola must dispose of excess inventory in the secondary market. a. What is the probability that Flextrola's demand will be within 25 percent of its forecast? b. What is the probability that Flextrola's demand will be more than 40 percent greater than Flextrola's forecast? c. Under this contract, how many units should Flextrola order to maximize its expected profit
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