Answer Happy

A B C D G H M Problem #4: Gaming Consider an electronics retailer selling gaming consoles. The retailer purchases the console at $240 per unit and sells them at $450 per unit. Any unsold inventory can be returned to the manufacturer for an 80% refund although the retailer will also have to pay a shipping and handling cost estimated to be $10 per unit. Demand over the upcoming holiday season is expected to be approximately 200 units although the historical standard deviation for holiday demand of consoles has been 40 units. a) What order quantity do you recommend? units b) Using the inventory policy recommended in a), what is the probability of a "stock-out"? % c) What profit do you expect? $ d) Suppose your manager will only accept a 10% probability of a stock-out, how many items would you order? units e) Suppose that 5% of these consoles are manufacture defects and are therefore dead-on-arrival. These do not need to be returned to the manufacturer but can be discarded at virtually no cost to the retailer. Furthermore, the cost of the unit is fully refunded by the manufacturer. How many units do you order? (disregard your stupid manager's requirement in from part d). units