1. The RBA is manufactured in Mainland China and costs RB $60 per pair to manufacture. The sneaker retails for $220. So as to protect this nascent new design,RB will not put the sneaker on clearance (if at all needed) until Summer 23 at which point it expects to only recover $52 per sneaker. What service level should RB choose to manufacture to? 2. The East, West, Central and South teams each expect demand of 80,000 units. The demand planning teams in each of these regions are only somewhat accurate so you can expect the coefficient of variation in demand in each of these regions to be 1. You approximate demand in each region by an independent Normal random variable so that total demand across all regions will also be a Normal random variable. What is the mean and standard deviation of total demand? 3. What ordering quantity would you recommend for the RBA?
Rebalance
Rebalance (RB) is a New England sneaker manufacturer that plans to release a high per-formance running shoe { the Rebalance Air (RBA) sneaker { in the US. RB divides the US into four major zones, each of which has come back with an estimate of demand. The planning team at RB needs to use this and other information to decide on a manufacturing quantity for the RBA sneaker in Fall 22 (the first season that will see the introduction of the RBA).
1. The RBA is manufactured in Mainland China and costs RB $60 per pair to manufacture. The sneaker retails for $220. So as to protect this nascent new design,RB will not put the sneaker on clearance (if at all needed) until Summer 23 at which point it expects to only recover $52 per sneaker. What service level should RB choose to manufacture to?
2. The East, West, Central and South teams each expect demand of 80,000 units. The demand planning teams in each of these regions are only somewhat accurate so you can expect the coefficient of variation in demand in each of these regions to be 1. You approximate demand in each region by an independent Normal random variable so that total demand across all regions will also be a Normal random variable. What is the mean and standard deviation of total demand?
3. What ordering quantity would you recommend for the RBA?
4. Your merchandisers point out to you that should the RBA be unavailable, the rest of RB's sneaker line-up in Fall 22 may well offer the RBA customer a viable alternative. Specifically, the team estimates that should the RBA not be available, a customer looking to buy that shoe will likely simply switch over to a different shoe in the RB lineup 55% of the time. What manufacturing quantity is appropriate now?
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