What is the expected overstock at the retailer

Assignment Help Operation Management

Reference no: EM131279904

Benetton has a quantity flexibility contract with a retailer for a seasonal product. If the retailer orders O units, Benetton is willing to provide up to another 35 percent if needed. Benetton’s production cost is $20 and it charges the retailer a wholesale price of $36. The retailer prices to customers at $55 per unit. Any unsold units can be sold by the retailer at a salvage value of $25. Benetton can salvage only $10 per unit for the leftover inventory. The retailer forecasts demand to be normally distributed, with a mean of 4,000 and a standard deviation of 1,600.

a- How many units O, should the retailer order?

b- What is the expected quantity purchased by the retailer? (recall that the retailer can increase the order by up to 35 percent after observing demand)

c- What is the expected quantity sold by the retailer?

d- What is the expected overstock at the retailer?

e- What is the expected profit for the retailer?

f- What is the expected profit for Benetton?

Reference no: EM131279904

Questions Cloud

Under what circumstances should international business : Under what circumstances should international business people impose the values of their culture on foreigners with whom they do business? What are two primary sources of information on a given country’s culture? Outline why the culture of a country ..

How long will it take to achieve some degree of excellence : Macon was a fifty-year-old company in the business of developing test equipment for the tire industry. The company had a history of segregated departments with very focused functional line managers. The company had two major technical departments: me..

Determine the equation for the unit formulation : Given the following information, determine the equation for the unit formulation.

Signed a revenue- sharing contract : Topgun Records has signed a revenue- sharing contract with a movie studio for CDs. Each CD costs the studio $2 to produce. How many CDs should Topgun order? How many CDs does Topgun expect to sell at a discount? What is the profit that Topgun expects..

What is the expected overstock at the retailer : Benetton has a quantity flexibility contract with a retailer for a seasonal product. If the retailer orders O units, Benetton is willing to provide up to another 35 percent if needed. Benetton’s production cost is $20 and it charges the retailer a wh..

Decided that concession sales will support themselves : As a manager of the St. Cloud Theatre Company, you have decided that concession sales will support themselves. The following table provides the information you have been able to put together thus far: Last year manager Jim Freeland has advised you to..

Different patterns that are found in multinational firms : What are the different patterns that are found in multinational firms? Describe the events that have had major impact on China's economy?

Experience in organizational development : If you have experience in organizational development (OD), discuss the process of OD and change from your perspective. You can provide insights into the diagnosis of problems, minimizing resistance to change, the selection of techniques, and/or imple..

The threat of a new entrants is increased : The threat of a new entrants is increased if

User Account

All Pages