Develop a 1,050-word case study analysis including the following:
• Use the sales forecaster’s prediction to describe a normal probability
distribution that can be used to approximate the demand distribution.
• Sketch the distribution and show its mean and standard deviation.
Hint: To find the standard deviation, think Empirical Rule covered in
Week 1.
• Compute the probability of a stock-out for the order quantities
suggested by members of the management team (i.e. 15,000; 18,000;
24,000; 28,000).
• Compute the projected profit for the order quantities suggested by
the management team under three scenarios: pessimistic in which
sales are 10,000 units, most likely case in which sales are 20,000
units, and optimistic in which sales are 30,000 units.
One of SuperFun’s managers felt the profit potential was so great the
order quantity should have a 70% chance of meeting demand and only
a 30% chance of any stock- outs. What quantity would be ordered
under this policy, and what is the projected profit under the three sales
scenarios?
SuperFun Toys, Inc., sells a variety of new and innovative children’s
toys. Management learned the pre-holiday season is the best time to
introduce a new toy because many families use this time to look for
new ideas for December holiday gifts. When SuperFun discovers a
new toy with good market potential, it chooses an October market
entry date. To get toys in its stores by October, SuperFun places one-
time orders with its manufacturers in June or July of each year.
Demand for children’s toys can be highly volatile. If a new toy
catches on, a sense of shortage in the marketplace often increases the
demand to high levels and large profits can be realized. However, new
toys can also flop, leaving SuperFun stuck with high levels of
inventory that must be sold at reduced prices. The most important
question the company faces is deciding how many units of a new toy
should be purchased to meet anticipated sales demand. If too few are