M CH 13-Post-Cless GradedoxGoogle Tranalato M Fwd: C| ezto.mheducation.com/hm.tp

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M CH 13-Post-Cless GradedoxGoogle Tranalato M Fwd: C| ezto.mheducation.com/hm.tpx?--0.3460740891 14604-1513098933163 Dan McClure owns a thriving decide how many copies to order of a new book, Power and Self Destruction, an exposé on a famous politician's lurid affairs. Interest in the book will be intense at first and then fizzle quickly as attention turns to other celebrities. The book's retail price is $18, and the wholesale price is $14. The publisher will buy-back the retailer's leftover copies at a full refund, but McClure Books incurs $5 in shipping and handling costs for each book returned to the publisher. Dan believes his demand forecast can be represented by a Normal distribution with mean 150 and standard deviation 70. independent bookstore in artsy New Hope, Pennsylvania. He must 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. Dan will consider this book to be a blockbuster for him if it sells more than 335 and Self Destruction will be a blockbuster? (Round your answer to 4 decimal places.) Dan will consider a book a "dog" if it sells less than 50% of his mean forecast. a. units. Using Table 13.4 and the round-up function, what is the probability Power b. Using Excel, calculate the probability that this expose will be a dog. (Round your answer to 4 decimal places.) Use Table 13.4 to determine the probability that demand for this book will be within 20% of the mean forecast. (Round your answer to 4 decimal places.) d Using Table 13.4 and the round-up rule, calculate the quantity that maximizes Dan's expected profit If Dan orders the quantity needed to achieve a 94% in-stock probability, then what e. is the probability that some customer won't be able to purchase a copy of the book? Suppose Dan orders 275 copies of the book. Using Table 13.4 and the round-up f. method, calculate Dan's expected left-over inventory to a whole unit. Do not round intermediate calculations. MacBook Air

Explanation / Answer

a) z-stat = (x-)/ = (335-150)/70 = 2.64 ~ 2.7 (rounded up)

From table 13.4, F(z) = 0.9965

Probability of selling more than 335 copies = 1 - 0.9965 = 0.0035

b) 50% of mean forecast = 150*50% = 75

z-stat = (75-150)/70 = 1.07143

Using excel, F(z) =NORMSDIST(1.07143) = 0.1420

Probability of selling less than 75 copies and that this expose will be a dog = 0.1420

c) upper bound of 20% within mean = 150*1.2 = 180

z-stat = (180-150)/70 = 0.4286

using Table 13.4, corresponding value of F(z) = 0.6554 (for z=4)

lower bound of 20% within mean = 150*0.8 = 120

z-state = (120-150)/70 = -0.4286

using Table 13.4, corresponding value of F(z) = 0.3446 (for z=4)

Probability that demand will be within 20% of mean forecast = 0.6554 - 0.3446 = 0.3108

d) Underage cost, Cu = retail price - wholesale price = 18-14 = 4

Overage cost, Co = 5   (cost incurred to return the unsold book for full refund)

Critical ratio F(z) = Cu/(Cu+Co) = 4/(4+5) = 0.4444 ~ 0.5 (rounded up)

From Table, corresponding value of z for F(z) 0.5 = 0

Optimal order quantity that maximizes profit = + z = 150 + 0*70 = 150

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