\$20 Bonus + 25% OFF

Referencing Styles : Harvard | Pages : 3
Solamalay Su Completed Orders: 192 5/5

For Teddy Bower

Acquisition cost per pair = \$ 40

Selling price per pair = \$ 54

But Salvage value = 0.5 * \$54 = \$27 every boot

Demand mean (µ) = 400 pairs

But standard deviation (α) = 150 pairs

Question 1.1

With regard to the provided data, we shall apply single-period stock model (Stevenson & Hojati, 2007).

Under-stocking cost (Cs) = shortage cost or demand estimation = price of sales per pair less cost per pair

Therefore Cs = 54 – 40= \$14 per pair

Overstocking cost (Co) = cost of average (demand overestimation) = cost per pair less the salvage value per pair

Therefore Co = 40-27 = \$13

Question 1.2

The probability or the level of service of not running out of stock is prescribed at,

Level of service (critical ratio) = Under-stocking cost / (Under-stocking cost + Overstocking cost) =14/ (14+13)

Level of service or critical ratio = 0.5185

It is essential for Teddy Bower to look for the z-score for the demand normal distribution which generates a probability (equal to the service level) of 0.5185

Thus, 51.85% of the area under the normal curve should be to the right side of the maximum level of stocking.  By use of the standard normal table, with an area of approximately 0.5185, our z-score shall be about 0.0464

Maximum inventory quantity = z + µ = (0.0464*150) +400 = 407 pairs

The company should order 407 pairs of boots from the suppliers since this is the optimal stock which will maximize the anticipated profit.

Question 1.3

The case assuming Teddy Bower will order 450 pairs. Apparently, at this quantity level, there will be excess after the season ends. However, it is expected that a certain discount rate of that excess will not be 50% as it was in the original case. This can be determined as follows

Z-score at 450 pairs of boots

Inventory = z + µ

Z*150 + 400 = 450

150z=50

Solutions

OR

Just share requirement and get customized Solution.

Orders

Overall Rating

Experts

Our Amazing Features

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat. If you are unable to calculate word count online, ask our customer executives.

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

5/5

203 Order Completed

97% Response Time

Richard Alpert

London, United Kingdom

4/5

3076 Order Completed

99% Response Time

Emily Wei

Singapore, Singapore

5/5

285 Order Completed

99% Response Time

Eugene Baranowski

London, United Kingdom

5/5

1758 Order Completed

99% Response Time

FREE Tools

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

Essay Typer

Get different kinds of essays typed in minutes with clicks.

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than \$2000

1

1

1

Live Review

Our Mission Client Satisfaction

nicely and compactly wrote. All main points were covered and all requirements were met. thank you

User Id: 527270 - 23 Oct 2020

Australia

Thanks for your great work in efficient and effective that I am happy to have it. I look forward to your work.

User Id: 506466 - 23 Oct 2020

Australia

I recived a 92 on this paper. I am not complaining. Thank you very much!!! Great job!!!

User Id: 384118 - 23 Oct 2020

Australia

Really thanks for rewrite my assignments thanks a lot. now everything is okay and it is really perfect assignment now . Thanks Sir .

Australia