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The company wants to maximize profits.The demand for product KB456 follows a uniform distribution with a minimum of 150 units and a maximum of 200 units. The company is considering three possible order levels. These are

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ABC Company stocks and ships to their retailers a product (KB456) each week. The ProductKB456 costs

$150 per unit and is sold to the retailers for $230 per unit. Units not sold during

one week are held over and sold the next week at a cost of $15 per unit, charged on beginning

inventory. The company also charges itself $12 per unit for any lost sales. The fixed cost for the

operations is $2,000 per week. The company wants to maximize profits.The demand for product KB456 follows a uniform distribution with a minimum of 150 units and a maximum of 200 units. The company is considering three possible order levels. These are

170, 175, or 180 units per week. Beginning inventory is zero.

******Need these questions answered*******

  • What is breakeven
  • What if demand is 10% lower
  • What if demand is 10% higher?
  • What is Optimal Range Order Point?
  • Which Order Point drives the least lost sales?
  • Which Order Point drives the least “carryover Inventory”?
  • What is demand band narrowed by 10%?
  • What is the least profit with the current demand level?
  • Impact on profit if order level drops by 10%?
  • What is your “Final” recommendation?
 
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