Solution to Case Problem Specialty Toys Essay example

(b) Using your algebraic model in part (a), what profit will the Company make if it sells at a price of $2000? (for practice only – don’t hand in)

1. a. The simulation indicates that 584 is the optimum stocking quantity. Daily profit at this stocking quantity is $331.4346.

One of specialty’s managers felt that the profit potential was so great that the order quantity should have a 70% chance of meeting demand and only a 30% chance of any stock-outs. What quantity would be ordered under this policy, and what is the projected profit under the three sales scenarios?

EOQ is used to find the optimal order quantity so that the annual inventory cost is

The customers, wholesalers and retailers may order in large quantities with the expectation that they will receive a greater allocation of products that are in short supply. The impact on the supply chain is significant as the forecasted demand is greatly, and unrealistically, increased with these inflated orders. Eventually orders disappear and cancellations pour in, making it impossible for the manufacturer to determine the real demand for its products

Part D: Stock shortages = how much inventory was stolen/lost? = Ending retail book value of inventory – physical inventory at retail = $30,000 (calculated in Part C) - $10,000 (given in problem) = $20,000 (in stock shortages) ----------------------------------------------------------------------------------------------------------------------------- --------------------------Part E: Adjusted ending retail book value of inventory = adjusted the value of the retail book value of inventory to reflect the actual physical inventory on hand. This adjusts your books to match what you actually have at the store. = $10,000 (your physical inventory)

A. The simulated function given in the Excel spreadsheet “Hamptonshire Express: Problem_#1” allows the user to find the optimal quantity of newspapers to be stocked at the newly formed Hamptonshire Express Daily Newspaper. Anna Sheen estimated the daily demand of newspapers to be on a normal standard distribution; stating that daily demand will have a mean of 500 newspapers per day with a standard deviation of 100 newspapers per day. Using the function provided, the optimal stocking quantity, which maximizes expected profit, is determined to be approximately 584 newspapers. If 584 newspapers were to be ordered, Hamptonshire Express will net an

We also need to make sure that Obermeyer honors the minimum order quantity required by the Hong Kong’s supplier. We can multiply the recommended optimal ordering level for each style by (20000/26360) thus ensuring that the total sum will exceed 20000 but which may not maximize profits.

Since the expected standard deviation is twice the standard deviation of the forecast samples, we can find the proportion of the time that the actual value of demand will be within a certain range. Because of our k value, our orders are all around 1 standard deviation below the mean, meaning that about 12% of the actual observations will fall below these orders. In that case, Sport Obermeyer would lose money based on the extra units. If demand falls less than 600 units above the initial order, we have a similar problem in the second ordering stage - Obermeyer cannot effectively adjust its order size to fit the reevaluated demand. Based on the cost of each item, which we ignored in our analysis, we could calculate the expected over-ordering from each item and find the ideal level, similar to the outside analysis that we found.

Supplier A: EOQ = Square root of (2 x 1500 x $1,000) = S.R. of 3,000,000 = 209

| Immediate result. If no merchandising loss, Kingsford obtain $1.87 billion of profit. With merchandising loss there is still a $1.72 billion profit.

Aver. level of inventory = (200 u / 2) + [(800 u x 10) /365]

When the market size changes from 120,000 to 110,000, the cash flow and NPV will be as the flowing:

Milligan’s Backyard Storage Kits, a mail order company, sells a variety of backyard storage unit kits and landscaping decorations to its customers. Although the company makes a profit, David Milligan, the company’s owner, realizes that he can improve his company’s operations if he better manages his inventory. Mr. Milligan requests your help in preparing an Inventory Analysis worksheet. The Inventory Analysis worksheet provides Mr. Milligan with information about his annual sales, cost of goods sold, gross profit, and markup on this products. Preparing the worksheet for Mr. Milligan requires you to insert columns, use several functions, and apply proper formatting to the

Once they have their inventory under control, the purchasing department should complete a very detailed cost analysis to determine the total inventory cost, including all aspects and hidden fees. Once they have the