Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost-the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 300,000 and a standard deviation of 100,000. Use Table 13.4. If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit for a correct answer will depend on using the specified method. a. How many kilograms should it place in the warehouse before the growing season? Use Table 13.4 and round-up rule. If it puts 400,000 kg in the warehouse, what is their expected revenue b. (include both domestic revenue and overseas revenue)? Use Table 13.4 and round-up rule. How many kilograms should it place in the warehouse if it wants to c. minimize its inventory while ensuring that the stockout probability is no greater than 10 percent? Use Table 13.4 and round-up rule. d. What is the maximum profit for this seed? 420,000 13,450,140 430,000 12,025,000
Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Montanso $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost-the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 300,000 and a standard deviation of 100,000. Use Table 13.4. If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit for a correct answer will depend on using the specified method. a. How many kilograms should it place in the warehouse before the growing season? Use Table 13.4 and round-up rule. If it puts 400,000 kg in the warehouse, what is their expected revenue b. (include both domestic revenue and overseas revenue)? Use Table 13.4 and round-up rule. How many kilograms should it place in the warehouse if it wants to c. minimize its inventory while ensuring that the stockout probability is no greater than 10 percent? Use Table 13.4 and round-up rule. d. What is the maximum profit for this seed? 420,000 13,450,140 430,000 12,025,000
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for
the next growing season. It will make one quantity decision. It costs Montanso $8 to make each kilogram (kg) of seed. It sells each kg
for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3
per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand
exceeds its quantity, then the sales are lost-the farmers go to another supplier. As a forecast for demand, it will use a normal
distribution with a mean of 300,000 and a standard deviation of 100,000. Use Table 13.4.
If a part of the question specifies whether to use Table 13.4, or to use Excel, then credit
for a correct answer will depend on using the specified method.
a.
How many kilograms should it place in the warehouse before the
growing season? Use Table 13.4 and round-up rule.
If it puts 400,000 kg in the warehouse, what is their expected revenue
b. (include both domestic revenue and overseas revenue)? Use Table
13.4 and round-up rule.
How many kilograms should it place in the warehouse if it wants to
c. minimize its inventory while ensuring that the stockout probability is no
greater than 10 percent? Use Table 13.4 and round-up rule.
d. What is the maximum profit for this seed?
420,000
13,450,140
430,000
12,025,000
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