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John started his business in outdoor material. He bought Wetsuits from O’neill and is selling the suits in his outdoor-shop. Each Wetsuit cost him $160. He sells the suits for $365. And is planning to sell the suits in the aftermarket (end of season) for $180. The type of the wetsuit is the JR HAMMER 3/2. He used the data of last year (appendix) to compute the order quantity.
What is the underage cost?
What is the overage cost?
What is the quantity of JR HAMMER 3/2 wetsuits he had to order to maximize profit according to the News Vendor Model? You can find or calculate the A/F ratio by using the table in the appendix. The mean is 1220 wetsuits. Also the standard normal distribution table is in the appendix.
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