Business, 18.03.2022 20:00 alexkrol10

FLEXTROLA, INC. Flextrola, Inc., an electronics systems integrator, is planning to sell its next generation product using components sourced from its supplier. Flextrola will integrate the component with some software and then sell it to consumers. Given the short life cycles of such products and the long lead times quoted by its supplier, Flextrola only has one opportunity to place an order prior to the beginning of its "selling season." Assume that Flextrola's demand during the season is normally distributed with a mean of 1000 and a standard deviation of 600. (A normal table is provided at the end of this exam for your convenience.) The supplier estimates that its production cost for the component is $52 per unit, and it will sell the component for $72 per unit to Flextrola. Flextrola incurs essentially no cost associates with the software integration and handling of each unit. Flextrola sells these units to consumers for $121 each. Flextrola can sell unsold inventory at the end of the season in a secondary electronics market for $50 each. The existing contract specifies that once Flextrola places the order, no changes are allowed to it. Also, the supplier does not accept any returns of unsold inventory, so Flextrola must dispose of excess inventory in the secondary market.

Required:
a. Under this contract, how many units should Flextrola order to maximize its expected profit?
b. What is the likelihood that Flextrola can meet all demand from inventory on hand if it ordered only 904 units?

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FLEXTROLA, INC. Flextrola, Inc., an electronics systems integrator, is planning to sell its next gen...

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