Concept explainers
Teddy Bower is an outdoor clothing and accessories chain that purchases a line of parkas at $10 each from its Asian supplier, TeddySports. Unfortunately, at the time of the order placement, demand is still uncertain: Teddy Bower forecasts that its demand is
- a. What is the probability this parka turns out to be a “dog,” defined as a product that sells less than half of the
forecast ? [LO13-1] - b. How many parkas should Teddy Bower buy from TeddySports to maximize expected profit? [LO13-1]
- c. If Teddy Bower orders 3000 parkas, what is the in-stock probability? [LO13-2]
- d. If Teddy Bower orders 3000 parkas, what is the expected leftover inventory? [LO13-2]
- e. If Teddy Bower orders 3000 parkas, what are expected sales? [LO13-2]
- f. If Teddy Bower orders 3000 parkas, what is expected profit? [LO13-2]
- g. If Teddy Bower wishes to ensure a 98.5 percent in-stock probability, how many parkas should Teddy Bower order? [LO13-3]
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