The purpose of this assignment is to know how to apply normal probability distribution concepts to a real business case.Read the case of specialty toys at the end of Chapter 6 in its entirety.Describe a normal probability distribution that can be used to approximate the demand distribution. Sketch the distribution and show its mean and standard deviation.Compute the probability of a stock-out for the order quantities suggested by members of management team.Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales = 10,000 units, most likely case in which sales = 20,000 units, and best case in which sales = 30,000 units.The order quantity should have a 70% chance of meeting demand and only a 30% chance of stock-outs. What quantity would be ordered under this policy, and what is the projected profit under the three sales scenarios?

Given that the management team suggested order quantities are: 15,000, 18,000, 24,000, 28,000 units.…

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18th Edition

ISBN:9780079039897

Author:Carter

Publisher:Carter

Chapter10: Statistics

Section10.4: Distributions Of Data

Problem 19PFA

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The purpose of this assignment is to know how to apply normal probability distribution concepts to a real business case.

Read the case of specialty toys at the end of Chapter 6 in its entirety.
Describe a normal probability distribution that can be used to approximate the demand distribution. Sketch the distribution and show its mean and standard deviation.
Compute the probability of a stock-out for the order quantities suggested by members of management team.
Compute the projected profit for the order quantities suggested by the management team under three scenarios: worst case in which sales = 10,000 units, most likely case in which sales = 20,000 units, and best case in which sales = 30,000 units.
The order quantity should have a 70% chance of meeting demand and only a 30% chance of stock-outs. What quantity would be ordered under this policy, and what is the projected profit under the three sales scenarios?

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