Using the newsvendor model-what probability of stock out

Assignment Help Operation Management

Reference no: EM131036513

Graphics Inc. makes novelty party supplies. They are trying to decide how many “March Madness 2016” shirts they should stock. They can purchase the shirts from their supplier for $5 each. They sell the shirts for $8 each at their store. The shirts are only worth selling in March of this year.

a. Using the newsvendor model, what probability of stock out should Graphics Inc. seek in their inventory decision?

b. Suppose Graphics Inc. thinks the demand will be between 1000 and 2000, with each number equally likely. How many should Graphics Inc. order?

c. Now, suppose that Graphics Inc. can sell any leftover shirts in April on clearance for $2. Will they order more or less shirts in that case? Why?

Reference no: EM131036513

Questions Cloud

Why would wal-mart want strong local control of stores : Why would it be beneficial for Wal-Mart to have suppliers in different countries? Why would Wal-Mart want strong centralized control of its stores? Why would Wal-Mart want strong local control of stores

What is the value of buzz : One of the classic debates in the popular press is whether all buzz or word of mouth--positive and negative--is good for a brand. Some feel that "any press is good press" and that as long as people are talking, that is a good thing. Others challenge ..

Using the newsvendor model-makes novelty party supplies : Graphics Inc. makes novelty party supplies. They are trying to decide how many “March Madness 2016” shirts they should stock. They can purchase the shirts from their supplier for $5 each. Using the newsvendor model, what probability of stock out shou..

International and world trade law-counterfeiting : There has been a movement in the last decade encouraging people to “buy American.” Discuss the legal and ethical issues related to boycotting goods from other countries. What are the practical business implications of such a move? The World Trade Org..

Using the newsvendor model-what probability of stock out : Graphics Inc. makes novelty party supplies. They are trying to decide how many “March Madness 2016” shirts they should stock. They can purchase the shirts from their supplier for $5 each. They sell the shirts for $8 each at their store. Using the new..

Prepare a level workforce plan : The Barberton Municipal Division of Road Maintenance is charged with road repair in the city of Barberton and the surrounding area. Cosmo Kramer, road maintenance director, must submit astang plan for the next year based on a set schedule for repairs..

Contrast job rotation-job enlargement and job enrichment : Describe in detail the big five dimensions of personality and how each one influences workplace behaviour. Describe in detail organizations’ efforts to engage employees in their work. How does employee engagement impact individuals’ organizational co..

Constitutes the major motif of the social history : It has been written, “The attempt of persons to understand the forces remaking their world and, by organization, to control them, constitutes the major motif of the social history of the late 19th century.” Describe how this statement applies to work..

Implementation of new enterprise resource system : Assume that you are a consultant providing services for Webster Corp. Webster is performing a significant project based implementation of a new enterprise resource system. The company is concerned about the difficulties in performing the project. Com..

User Account

All Pages