Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Monsanto $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a normal distribution with a mean of 300,000 and a standard deviation of 100,000.
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
Monsanto sells genetically modified seed to farmers. It needs to decide how much seed to put into a warehouse to serve demand for the next growing season. It will make one quantity decision. It costs Monsanto $8 to make each kilogram (kg) of seed. It sells each kg for $45. If it has more seed than demanded by the local farmers, the remaining seed is sent overseas. Unfortunately, it only earns $3 per kg from the overseas market (but this is better than destroying the seed because it cannot be stored until next year). If demand exceeds its quantity, then the sales are lost—the farmers go to another supplier. As a forecast for demand, it will use a
Round your answer to 2 digits after the decimal point if it is not an integer. Do NOT use comma in your numeric answers. Use excel for more accurate answers. Do not round till the end.
Monsanto’s maximum profit for this seed is $[xa].
The underage cost is $[xb]. The overage cost is $[xc]. The critical ratio is [xd]. Monsanto should place [xe] kg of seed in the warehouse before the growing season to maximize its expected profit. In such case, the expected leftover inventory will be [xf] kg, the expected sales will be [xg] kg, the expected profit will be $[xh], and the mismatch cost will be $[xi] (use the standard normal table below).
If Monsanto puts 400,000 kg in the warehouse, its expected revenue (include both domestic revenue and overseas revenue) will be $[xj] (use the standard normal table below).
Monsanto should place [xk] kg of seed in the warehouse if it wants to minimize its inventory while ensuring that the stockout probability is no greater than 10% (use the standard normal table below).
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