Question: Problem 4. Flextrola, Inc. An electronics systems integrator is planning to design a key component for their next generation product with Solectrics. Flextrola will integrate

Problem 4. Flextrola, Inc. An electronics systems

Problem 4. Flextrola, Inc. An electronics 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. Flextrola's demand during the season is normally distributed with a mean of 1,000 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 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 25 percent of its forecast? b. What is the probability that Flextrola's demand will be more than 40 percent greater than its forecast? Under this contract, how many units should Flextrola order to maximize its expected profit? C. For part d through I, assume Flextrola orders 1200 units d. What are Flextrola's expected sales? e. How many units of inventory can Flextrola expect to sell in the secondary electronics market? f. What is Flextrola's expected gross margin percentage, which is (revenue - cost)/ Revenue? g What is Flextrola's expected profit? h. What is Solectric's expected profit? i. What is the probability that Flextrola has lost sales of 400 units or more? j. A sharp manager at Flextrola noticed the demand forecast and became wary of assuming that demand is normally distributed. She plotted a histogram of demands from previous seasons for similar products and concluded that demand is better represented by the log normal distribution with mean of 1000 and standard deviation of 600. Using the more accurate forecast (the log normal distribution), approximately how many units should Flextrola order to maximize its expected profit

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!