10/24/2012
I. Introduction:
The Specialty Toys Company faces a challenge of deciding how many units of a new toy should be purchased to meet anticipated sales demand. If too few are purchased, sales will be lost; if too many are purchased, profits will be reduced because of low prices realized in clearance sales. Here, I will help to analyze an appropriate order quantity for the company. II. Data Analysis:

1.

20,0
00
.025
10,0
00
30,0
00

.025
.95

20,0
00
.025
10,0
00
30,0
00

.025
.95

Since the expected demand is 2000, thus, the mean µ is 2000. Through Excel, we get the z value given a 95% probability is 1.96. Thus, we have: z= (x-µ)/ σ=(30000-20000)/ σ=1.96, so we get the standard deviation σ=(30000-20000)/1.96=5102. The sketch of distribution is above. 95.4% of the values of a normal random variable are within plus or minus two standard deviations of its mean.

2. At order quantity of 15,000, z= (15000-20000)/5102=-0.98, P(stockout) = 0.3365 + 0.5 = 0.8365
At order quantity of 18,000, z= (18000-20000)/5102=-0.39,
P(stockout) = 0.1517 + 0.5= 0.6517
At order quantity of 24,000, z= (24000-20000)/5102=0.78,
P (stockout) = 0.5 - 0.2823 = 0.2177
At order quantity of 28,000, z= (28000-20000)/5102=1.57,
P (stockout) = 0.5 - 0.4418 = 0.0582

3.
Order Quantity = 15,000|
Unit Sales| Total Cost| Sales at $24| Sales at $5| Profit| 10,000| 240,000| 240,000| 25,000| 25,000|
20,000| 240,000| 360,000| 0| 120,000|
30,000| 240,000| 360,000| 0| 120,000|

Order Quantity = 18,000|
Unit Sales| Total Cost| Sales at $24| Sales at $5| Profit| 10,000| 288,000| 240,000| 40,000| -8000|
20,000| 288,000| 432,000| 0| 144,000|
30,000| 288,000| 432,000| 0| 144,000|

Order Quantity = 24,000|
Unit Sales| Total Cost| Sales at $24| Sales at $5| Profit| 10,000| 384,000| 240,000| 70,000| -74,000|
20,000| 384,000|...

...of stockout will be 0.2177
At 28,000 the probability of stockout will be 0.0582
3. Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales = 10,000 units, most likely case in which sales = 20,000 units and best case in which sales = 30,000 units:
Order Quantity: 15,000 were cost price is $16, selling price $24 & after holiday selling price $5
|Unit Sales...

...be the demand for the toy. Then X follows normal distribution with mean μ = 20000 and standard deviation σ. Then
P(10000 < X < 30000) = 0.95
P( X < 20000)=0.5
P(10000 < X < 20000) = 0.475
P( X < 10000)=0.025
NORM.S.INV(0.025)=-1.96
NORM.S.INV(0.975)=1.96
Z-score of 10000 =-1.96
Z-score of 30000=1.96
σ = (30000-20000)/1.96 =10000/1.96 = 5102
Standard Deviation of 5102
The graph above shows the distribution for the demand for the Weather Teddy Bear using...

...bushels
110,000
Alfalfa
1.5 tons
1800
Barley
2.2 tons
2200
Constraints:
Thus mathematical model is:
Maximize:
Subject to:
Solving the problem using solver of MS Excel we get the solution as follows:
Variable
Solution
547.21
544.90
422.71
311.34
373.84
65.52
65.52
0.00
Variable
Max. Profit
Solution
0.00
0.00
586.66
376.95
35.33
0.53
0.53
315862.07
Crop Plan
Parcel
Cultivation Area...

...Case Study Analysis:
Abstract
This analysis examines freight cost and cleaning fluid supplies at two locations; Cincinnati and Oakland, to determine the optimal distribution network to supply the cleaning fluid to Great North American at minimal cost to Solutions Plus. Based on projected cost a bid recommendation is made and decision factors related to the analysis are discussed.
Keywords: Solutions Plus, Cost minimization, Breakeven, Bid,...

...
What is the weighted average cost of capital (WACC) for Marriott Corporation?
WACC = (1 - τ)rD(D/V) + rE(E/V)
D = market value of debt
E = market value of equity
V = value of the firm = D + E
rD = pretax cost of debt
rE = after tax cost of debt
τ = tax rate = 175.9/398.9 = 44%
Cost of Equity
Target debt ratio is 60%; actual is 41% [Exhibit 1]
βs = 1.11
βu = βs / (1 + (1 – τ) D/E)
= 1.11/(1 + (1 – .44) (.41))
= 0.80
Using the target debt ratio of 60%:
βTs = βu (1 + (1 –...

...Transportation Problem and Solution in Case of Bangladesh
An adequate and efficient transport system is a pre-requisite for both initiating and sustaining economic development. Investment in improving transport efficiency is the key to expansion and integration of markets - sub-national, national and international. It also helps the generation of economies of scale, increased competition, reduced cost, systematic urbanization, export-led...

... Case 13: Southeastern Specialty, Inc.
Financial Risk (1, 2, 3, 4, & 6)
1. Is the return on the one-year T-bill risk free?
No, the return on the one-year T-bill is not risk free. Financial risk is related to the probability of earning a return less than expected and the larger the chance of earning a return far below that expected, the greater the amount of financial risk. Risk free assumes 100% probability that the investment will earn the total percent of...

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