NOLA Electronics sells computer parts for self-assembly to university students. One of the suppliers is releasing...

 

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NOLA Electronics sells computer parts for self-assembly to university students. One of the suppliers is releasing a new hard drive, the HD22. NOLA Electronics spends $340 to buy each unit of HD22. Each unit will be sold to the students for $500. The procurement lead time is long, and the life cycle of this product is short, because of which NOLA Electronic will only get to place a single order for the HD22. Using prior sales data, it is forecasted that the demand follows a normal distribution with a mean of 1,050 units and standard deviation 600 units. It is assumed that, after the selling season, all remaining inventory for HD22 will be sold to the students at a very attractive discounted price of $200. a. What is the underage (marginal benefit) and the overage cost (marginal cost) for HD22? b. What is the profit-maximizing order quantity for HD22? What would be the in-stock probability if NOLA Electronics ordered the profit- maximizing quantity as found in part c? d. Assume that NOLA Electronics orders 900 HD22. What would be the in-stock probability now? An American airline offers two fare classes, with the lower-class fare being $250 and the higher- class fare begin $600. If the demand for the higher fare class follows a normal distribution with mean 200 and standard deviation 50, what is the profit-maximizing protection level for higher fare class? NOLA Electronics sells computer parts for self-assembly to university students. One of the suppliers is releasing a new hard drive, the HD22. NOLA Electronics spends $340 to buy each unit of HD22. Each unit will be sold to the students for $500. The procurement lead time is long, and the life cycle of this product is short, because of which NOLA Electronic will only get to place a single order for the HD22. Using prior sales data, it is forecasted that the demand follows a normal distribution with a mean of 1,050 units and standard deviation 600 units. It is assumed that, after the selling season, all remaining inventory for HD22 will be sold to the students at a very attractive discounted price of $200. a. What is the underage (marginal benefit) and the overage cost (marginal cost) for HD22? b. What is the profit-maximizing order quantity for HD22? What would be the in-stock probability if NOLA Electronics ordered the profit- maximizing quantity as found in part c? d. Assume that NOLA Electronics orders 900 HD22. What would be the in-stock probability now? An American airline offers two fare classes, with the lower-class fare being $250 and the higher- class fare begin $600. If the demand for the higher fare class follows a normal distribution with mean 200 and standard deviation 50, what is the profit-maximizing protection level for higher fare class?

Answer rating: 100% (QA)

a To calculate the underage cost marginal benefit and overage cost marginal cost for HD22 we can use the Newsvendor Model formula Underage Cost UC Selling price Purchase cost UC 500 340 160 Overage Co... View the full answer