new and innovative children's toys. As with other products, Specialty faces the decision of how may Weather Teddy units to order for coming holiday season. Members of the management team suggested order quantities of 15,000, 18,000, 24,000, 28,000 units. The wide range of order quantities suggested indicates considerable disagreement
Specialty Toys, Inc., sells a variety of new and innovative children's toys. As with other products, Specialty faces the decision of how may Weather Teddy units to order for coming holiday season. Members of the management team suggested order quantities of 15,000, 18,000, 24,000, 28,000 units. The wide
Prepare a managerial Report that addresses the following issues and recommends an order quantity for the Weather Teddy product.
1. Use the sales forecaster’s, predictions to describe a
2. Compute the probability of a stock-out for the order quantities suggested by members of the management team.
3. Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales equal 10,000 units, most likely case in which sales equal 20,000 units, and best case in which sales equal 30,000 units.
4. One of Specialty’s manager 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 order under this policy, and what is the projected profit under the three sales scenarios?
5. Provide your own recommendations for an order quantity and note the associated profit projections. Provide a rationale for you recommendation.
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