What would be his expected procurement cost

Assignment Help Operation Management
Reference no: EM1382149

Handi Inc., a cell phone manufacturer, procures a standard display from LCD Inc. via an options type of supply contract . At the start of q uarter 1 (Q1) Handi pays LCD $20 per option. At that time Handis forecast of demand in Q2 is n ormall y distributed with mean 20,000 and standard deviation 8 000. At the start of Q2 Handi learns exact demand for Q2 and then exe rcises options at the fee of $4 0 per option (for every exercised option LCD delivers one display to Handi). Assume Handi starts Q2 with no display inventory and displays owned at the end of Q2 are worthless. Should Handis demand in Q2 be larger than the number of options held, Handi purchases additional di s plays on the spot market for $75 per unit.

a. Suppose Handi purchases 15 ,000 op tions. What is the probability that he will need to do procurement on the spot market?

b. Given that Handi purchases 15 ,000 options, what is the expected number of displays Handi will buy on the spot market?

c. Given that Hand i purchases 15 ,000 options, what is the expected number of options that Handi will exercise?

d. What is Handis expected total procurement cost given that he purchases 15 ,000 options?

e. What is the fill - rate Handi implies by purchasing 15 ,000 options?

f. How many options shou ld Handi purchase from LCD, Inc. ? (i.e. the optimum options)

g. What is Handis expected total procurement cost given the number of purchased options from part f ?

h. Suppose Handi were to procure exclusively from the spot market? What would be his expected procurement cost? What would be his fill - rate in this arrangement? Also, what is the mismatch cost he incurs with this arrangement?

Reference no: EM1382149

Questions Cloud

Determine heterozygous at the flower color locus : In wild petunias, the allele for red flower color ( R ) is dominant over the allele for white flower color ( r ). We sample a population and find 225 plants have white flowers and seventy-five have red flowers.
Create analysis and design project by part of local business : Recognize part of local business or organization which you can use for analysis and design project. You must explain the scope of project.
American nuclear family : Although family forms have varied over historical and cultural lines, why is the image of the nuclear family so pervasive in American society?
Describe the 4ps of marketing in your organization : Describe the 4Ps of marketing in your organization? (Product/positioning, pricing, promotion, and placement) Prepare this assignment according to the APA guidelines
What would be his expected procurement cost : Suppose Handi were to procure exclusively from the spot market? What would be his expected procurement cost? What would be his fill - rate in this arrangement? Also, what is the mismatch cost he incurs with this arrangement?
Combination of policy instruments : The marketing mix can be described as a particular combination of policy instruments that are integrated to form a certain marketing strategy that will enable a transport enterprise to compete in a particular segment''
Heterozygote carriers for the disease : Phenylketonuria is a severe form of mental retardation caused by a recessive allele. The situation affects about 1 in 25,000 newborn babies.
Explain the company''s decision environment : Explain the company's decision environment, risk management, and how the organization resolves conflict through the strategic negotiation process.
Forms of social media : The Internet has provided many forms of social media and new forms are continuously emerging. If you were a reporter with access to all forms of media distribution, which do you choose first to tell a story? Why?

Reviews

Write a Review

 

Operation Management Questions & Answers

  What gripes travellers almost as much as these annoyances

what gripes travellers almost as much as these annoyances is finding out that the person sitting next to them paid a much lower fare than they did for their seat.

  Describe conceptually about maslow needs hierarchy

is emotional labour more troublesome for college instructors or for telephone operators working at an emergency service. four drives should parallel seven needs which Maslow identified

  Evaluation criteria during the procurement phase

evaluation criteria during the procurement phase or after they have submitted their proposals/bids. Please answer in 120 words or less also cites url or references used.

  Illustrate what do you think are risks involved

Illustrate what do you think are risks involved (to HR and organization as a whole) if HR does not make this a priority and instead remain a purely task-oriented department mostly administrative in nature.

  Illustrate what is effect of complexity on fresh connection

Illustrate what choices must Fresh Connections make in developing an operations strategy. Illustrate what is the effect of complexity on Fresh Connections' operations.

  Evaluate employees individual work performance

Managers like Janis Blancero face a more complicated decision when evaluating personal requests of employees versus evaluating employees individual work performance. Explain.

  Calculate ways to save expenses for jva corp

Depend on the prices which have been computed, a net savings should be evident to allow for major or minor price savings for JVA Corp.

  Determine theoretical number of workstations

An insurance company uses accompanying tasks to process paperwork. Forty claims need to be processed in an eight-hour day. Determine theoretical number of workstations.

  Calculate the economic production quantity

Compute the economic production quantity. Compute the annual minimum total cost. How many working days does each production run take? What is the level of maximum inventory? What is the cycle time.

  Compare the forecasts using mad

The subsequent data are monthly sales of jeans at a local department store. The buyer would like to forecast sales of jeans for the next month, July. Compare the forecasts using MAD.

  Explain how would being conscious of this positivity ratio

Explain how would being conscious of this positivity ratio change your interactions with colleagues, direct reports, friends or children.

  Elucidate how many applications can be processed per hour

Elucidate how many applications can be processed per hour if a second clerk is added to check for violations.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd