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

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
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. Flextrola's demand during the season is normally distributed with a mean of 950 and a standard deviation of 575. 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 Flextrola places the order, no changes are allowed to it. Also, Solectrics does not accept
any returns of unsold inventory, so Flextrola must dispose of excess inventory in the secondary market.
a. What is the probability that Flextrola's demand will be within 20 percent of its forecast (mean demand)?
b. What is the probability that Flextrola's demand will be more than 45 percent greater than Flextrola's forecast
(mean demand)?
c. Under this contract, how many units should Flextrola order to maximize its expected profit?
d. What is the cost of uncertainty in demand?
e. If Flextrola orders 1500 units, how many units of inventory can Flextrola expect to sell in the secondary electronics market?
f. If Flextrola orders 1500 units, what are expected sales?
G.If Flextrola orders 1500 units, what is expected profit?
 Flextrola, Inc., an electronics systems integrator, is planning to design a

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!