1. Zara needs to order its inventory of warm clothing collection in early summer. For a particular coat, procurement cos

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1 Zara Needs To Order Its Inventory Of Warm Clothing Collection In Early Summer For A Particular Coat Procurement Cos 1 (85.92 KiB) Viewed 74 times

1. Zara needs to order its inventory of warm clothing collection in early summer. For a particular coat, procurement cost is $300. Zara has planned to sell these coats for $800 during winter. At the end of the winter, Zara believes it can sell its whole leftover inventory for markdown price of $150 (salvage value). Based on the records of demand during the last 10 years, we estimate that demand for this coat has a normal distribution with mean 120 and standard deviation of 40 units. a. Determine the optimal number of coats for Zara to be ordered prior to the winter selling season? (5 points) b. What would be the optimal number of coats to order if the markdown price is $320? (4 points) c. If demand for this coat happens as even numbers and each customer purchases even number of coats (i.e., 2,4,6,...), is it possible that the optimal order quantity to maximize Zara's profit is an odd (i.e., 1,3,5,..) number? Explain why. (5 points)