Champion manufactures winter fleece jackets for sale in the United States. Demand for jackets during the season
Question:
Champion manufactures winter fleece jackets for sale in the United States. Demand for jackets during the season is normally distributed, with a mean of 20,000 and a standard deviation of 10,000. Each jacket sells for $60 and costs $30 to produce. Any leftover jackets at the end of the season are sold for $25 at the year-end clearance sale. Holding jackets until the year-end sale adds another $5 to their cost. A recent recruit has suggested shipping leftover jackets to South America for sale in the winter there rather than running a clearance. Each jacket will fetch a price of $35 in South America, and all jackets sent there are likely to sell. Shipping costs add $5 to the cost of any jacket sold in South America. Would you recommend the South American option? How will this decision affect production decisions at Champion? How will it affect profitability? On average, how many jackets will Champion ship to South America each season?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Supply Chain Management Strategy Planning And Operation
ISBN: 9781292257891
7th Global Edition
Authors: Sunil Chopra
Question Posted: