Operations Management
17th Edition
ISBN: 9781259142208
Author: CACHON, Gérard, Terwiesch, Christian
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 4PA
Fashionables is a franchisee of The UnLimited, the well-known retailer of fashionable clothing. Prior to the winter season, The UnLimited offers Fashionables the choice of five different colors of a particular sweater design. The sweaters are knit overseas by hand; because of the lead times involved, Fashionables will need to order its assortment in advance of the selling season. As per the contracting terms offered by The UnLimited, Fashionables will also not be able to cancel, modify, or reorder sweaters during the selling season. Demand for each color during the season is
The UnLimited offers the sweaters to Fashionables at the wholesale price of $40 per sweater, and Fashionables plans to sell each sweater at the retail price of $70 per unit. The UnLimited does not accept any returns of unsold inventory. However, Fashionables can sell all of the unsold sweaters at the end of the season at the fire-sale price of $20 each.
- a. How many units of each sweater type should Fashionables order to maximize its expected profit? [LO13-1]
- b. If Fashionables wishes to ensure a 97.5 percent in-stock probability, what should its order quantity be for each type of sweater? [LO13-3]
- c. Say Fashionables orders 725 of each sweater. What is Fashionables’ expected profit? [LO13-2]
- d. Say Fashionables orders 725 of each sweater. What is the stockout probability for each sweater? [LO13-2]
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Fashionables is a franchisee of The UnLimited, the well-known retailer of fashionable clothing.
Prior to the winter season, The UnLimited offers Fashionables the choice of five different colors of
a particular sweater design. The sweaters are knit overseas by hand, and because of the lead
times involved, Fashionables will need to order its assortment in advance of the selling season.
As per the contracting terms offered by The UnLimited, Fashionables will also not be able to
cancel, modify or reorder sweaters during the selling season. Demand for each color during the
season is normally distributed with a mean of 600 and a standard deviation of 175. Further, you
may assume that the demand for each sweater is independent of the demand for any other color.
The UnLimited offers the sweaters to Fashionables at the wholesale price of $44 per sweater, and
Fashionables plans to sell each sweater at the retail price of $74 per unit. The UnLimited does not
accept any returns of unsold…
Chapter 13 Solutions
Operations Management
Ch. 13 - Which of the following is NOT true about the...Ch. 13 - A newsvendor orders the quantity that maximizes...Ch. 13 - Prob. 3CQCh. 13 - Suppose the newsvendor model describes a firms...Ch. 13 - Prob. 5CQCh. 13 - Prob. 6CQCh. 13 - A retailer has two merchandizers, Sue and Bob, who...Ch. 13 - Prob. 8CQCh. 13 - Which of the following changes in the in-stock...Ch. 13 - Prob. 10CQ
Ch. 13 - Prob. 11CQCh. 13 - Prob. 12CQCh. 13 - Prob. 13CQCh. 13 - Prob. 14CQCh. 13 - Dan McClure owns a thriving independent bookstore...Ch. 13 - Flextrola, Inc., an electronics systems...Ch. 13 - Monsanto sells genetically modified seed to...Ch. 13 - Fashionables is a franchisee of The UnLimited, the...Ch. 13 - Teddy Bower is an outdoor clothing and accessories...Ch. 13 - Prob. 6PACh. 13 - Goop Inc. needs to order a raw material to make a...Ch. 13 - Geoff Gullo owns a small firm that manufactures...Ch. 13 - Prob. 9PACh. 13 - Prob. 10PACh. 13 - Prob. 11PA
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