Question: The monthly demand for the latest computer at Newland Computers follows a normal distribution with a mean of 3 5 0 and standard deviation of
The monthly demand for the latest computer at Newland Computers follows a normal distribution with a mean of and standard deviation of Newland purchases these computers for $ and sells them for $ It costs the company $ to place an order and $ for every computer held in inventory at the end of each month. Currently, the company places an order for computers whenever the inventory at the end of a month falls below units. Assume the beginning inventory is units, unmet demand in any month is lost to competitors, and orders placed at the end of one month arrive at the beginning of the next month. a Create a spreadsheet model to simulate the profit the company will earn on this product over the next years. What is the average level of profit the company will earn? b Suppose the company wants to determine the optimum reorder point and order quantity. Which combination of reorder point and order quantity will provide the highest average profit over the next years?
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