2024 – 1 Bower is an outdoor clothing accessories chain that produces a line of hats for 10 from its
homework 4 – 2024
1. Bower is an outdoor clothing accessories chain that produces a line of hats for $10 from its Asian supplier, BowerSports. Unfortunately at the time of order placement, demand is uncertain. Bower forecasts that its demand is normally distributed with a mean of 2,100 and standard deviation of 1,200. The hats are sold for $22. Unsold hats have little salvage value: Bower simply donates them to charity.
a) What order quantity, Q, maximizes Bower’s expected profit?
For the remaining questions assume the order quantity Q = 3,000 (Not what you calculated in part a)
b) What are the expected lost sales?
c) What are the expected sales?
d) What is the expected left over inventory?
e) What is its expected profit?
f) What is the expected fill rate
g) What is its stock-out probability?
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