Rating Performance Criterion Weight Supplier A Supplier B Supplier C 1. Price 0.3 0.7 0.8 0.6 2. Quality 0.2 0.3 0.5 0.4 3. Delivery 0.2 0.7 0.5 0.4 4. Production facilities 0.1 0.8 0.6 0.5 5. Environmental protection 0.1 0.8 0.7 0.9 6. Financial position 0.1 0.9 0.8 0.7

As with other products, Fisher-Price faces the decision of how many Weather Teddy units to order for the comingholiday season. Members of the management team suggested order quantities of 15,000, 18,000, 24,000, or28,000 units. The wide range of order quantities suggested indicates considerable disagreement concerning themarket potential. The product management team asks you for an analysis of the stock-out probabilities forvarious order quantities, an estimate of the profit potential, and to help make an order quantity recommendation.Fisher-Price expects to sell Weather Teddy for $24 based on a cost of $16 per unit. If inventory remains afterthe holiday season, Fisher-Price will sell all surplus inventory for $5 per unit. After reviewing the sales historyof similar products, Fisher-Price’s senior sales forecaster predicted an expected demand of 20,000 units with a.95 probability that demand would be between 10,000 units and 30,000 units. Question: One of Fisher-Price’s managers felt…

Madonna’s Burgers is considering making hamburger buns in-house instead of buying them from its supplier. It has estimated the fixed costs for a used over to be $7,000 and the variable costs for the buns to be $0.25. It purchases buns for $0.50 each, and there are no fixed purchase costs. Its annual demand for buns is forecasted to be 15,000. Madonna’s wants to know how many buns it has to make to break even.

What is the distinction between simulated and anticipated average demand: