What is the optimal service level if the ordering decision

Assignment Help Operation Management

Reference no: EM133345571

Case Study: Tech Fiber (TF) is a manufacturer of synthetic fibers used in ski jackets and other winter outerwear. TF has patented a new lightweight fiber that is very inexpensive to manufacture but has the warmth and water-repellent properties of very expensive natural fibers. TF has designed a new jacket using this fiber that it wants to bring to the market. The jacket will be sold exclusively through Ski Adventure (SA), a major retailer of winter apparel and sport equipment. Each jacket costs $10 to produce and TF plans to charge a wholesale price of $100 per jacket from the retailer. The retailer plans to sell the jacket for a price of $200. At this price, the manager at SA estimates the demand for the new jacket to be normally distributed with a mean of 1,000 and a standard deviation of 300. SA is unable to salvage anything for unsold jackets.

Question: What is the optimal service level if the ordering decision is made by the manager of SA, i.e. maximizing SA profit only?

Reference no: EM133345571

Questions Cloud

About dunder-mifflin of scranton : How can I/O psychology be applied to various fictional organizations? what would an I/O psychologist think about Dunder-Mifflin of Scranton (The Office)?

At what inventory level should she place an order : MBA 605 Coastal Carolina University What is the economic quantity for Paula to order and At what inventory level should she place an order

What is the equipments annual inventory ordering cost : A medical equipment has an average annual demand is 367 units in a clinic. Its unit cost is $101. It costs the clinic $59 to place an order, and the per unit

Exclusive rights of copyright holders : Which of the exclusive rights of copyright holders might you be infringing if you did not get permission from Maya Angelou's estate to recite this poem

What is the optimal service level if the ordering decision : What is the optimal service level if the ordering decision is made by the manager of SA, i.e. maximizing SA profit only?

What are some of these differences : In the context of profitable growth, differentiate between a low-cost strategy and a differentiation strategy with an example.

Explain the purpose of conducting accident investigations : Explain the purpose of conducting accident investigations in general. Then, explain the need for one in this situation. Compare multiple investigation

How can businesses join forces online using web 2.0 : How can businesses join forces online using Web 2.0 applications? Consider what influence future Web capabilities (Web 3.0) will have on how businesses

Explain the nature of peters error : Explain the nature of Peters error (i.e., random versus systematic). Consider both the direct and indirect effects of this error in your answer

User Account

All Pages