Question: T - shirts - R - us ( TRS ) is planning production for its five t - shirt styles that are popular in Spring.
TshirtsRus TRS is planning production for its five tshirt styles that are popular in Spring. All five styles have demand that is normally distributed. The bestselling style has an expected demand of and a standard deviation of Each of the other four styles has an expected demand of with a standard deviation of Currently, all tshirts are produced before the start of the season. Production cost is $ per tshirt, and they are sold for a wholesale price of $ Any unsold tshirts at the end of the season are discounted to $ and they all sell at that price. It costs $ to hold the tshirt in inventory for the entire season if it does not sell.
How many tshirts of each type should TRS manufacture?
What is the expected profit from this policy?
How many tshirts does TRS expect to sell at a discount?
TRS is considering the postponement of manufacturing using new machines. This will require the identical basic tshirts to be made in advance and the final touches added later. This will increase production cost of each tshirt by $ How many tshirts should TRS manufacture with postponement? What is the expected profit from this policy?
Another option is to produce the popular style without postponement and the other four styles using postponement. What is the expected profit under this policy?
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